Rising propane prices put pressure on poultry industry

Casey Wilson, a poultry grower near Huntsville, Ark., said three of his seven houses are heated with propane gas and with two-week old birds and frigid temperatures he is quickly burning through the fuel supply.

“I don’t even want to think about what it’s going to cost when I have to call the fuel man. I won’t have enough to last this flock,” Wilson said, Wednesday evening (Jan. 29).

The average tank holds about 1,000 gallons per poultry house. Wilson said if he has to buy more fuel, it won’t be a full tank at the higher prices.

He’s not alone.

National Chicken Council President Mike Brown said his trade group is working with federal agencies, organizations and stakeholders to help alleviate the spot shortages being experienced with very tight supply reported in 31 states, including Arkansas.

Poultry is big business across the south, and areas from Arkansas to Georgia have been hit with frigid temperatures during the past two months.

“NCC fully understands that adequate residential heating must be the first priority, but, at the same time, it will be important to work to minimize the potential disruption to the food supply, especially animal agriculture. Chicken companies are not placing baby chicks in growout housing unless there is an assured supply of propane. NCC’s animal care/welfare guidelines call for the chicken during growout to be comfortable and free of stress from a harsh environment, such as a growout house being too cold,” Brown said.

Arkansas Attorney General Dustin McDaniel issued a consumer alert Wednesday to inform Arkansans about the cause of the spike in prices and to offer advice to those who are affected.

Spot wholesale propane prices have rallied $3.987 per gallon across the Midwest states this week, according to the U.S. Energy Information Administration. The price jumped 138% during January. The spot residential prices across the Midwest rose to $4.202 per gallon this week. 

The AG’s office said it has received dozens of calls about the price surge.

“I share the concerns about the high cost of propane, and I hope that these prices are only an anomaly because of the extremely cold temperatures and supply shortages. The retail price of propane is based largely on supply and demand, just like any free-market commodity,” McDaniel said. “However, we will continue to monitor propane prices for possible price gouging and look for other ways to assist consumers.”

Last week, Gov. Mike Beebe declared a state of emergency in Arkansas because of the propane shortage. During the state of emergency, the state’s price gouging law is in effect. That law prohibits businesses from increasing prices more than 10% unless the increased price is directly related to costs imposed by a supplier or because of higher labor and materials costs.
 
If propane retailers or distributors reach agreements with competitors on prices, that is price fixing. Federal and state antitrust laws prohibit fixing of prices. Any consumers with direct knowledge of price fixing of any commodity, including propane, should contact the Attorney General’s Consumer Protection Division.

Wilson said local poultry growers are already operating on razor thin margins and there is no room from doubling propane and fuel prices. Poultry houses will likely sit empty before farmers go into more debt, he said.