In an announcement by the ACCC today, Inghams Group Ltd (ASX: ING) and other chicken producers were granted authority to work together in preventing food shortages. The Inghams share price has been flat today and, at the time of writing, is still sitting at its Friday closing price of $3.22.
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What were the details of the ACCC announcement?
According to the ACCC, conditional interim authorisation has been granted to allow Inghams and its competitors to cooperate on a range of measures relating to their plants. The measures are aimed at ensuring sufficient supply of chickens and chicken meat, reducing job losses, and managing the effects of stage 4 restrictions in Victoria on chicken growers and other parts of the supply chain.
The authorisation will allow Inghams and its competitors to share or coordinate their processing capacity, essential staff, facilities and products, however, the authorisation does not allow agreements on the pricing of goods and services supplied or acquired.
ACCC Deputy Chair, Mick Keogh, commented on the authorisation, stating;
"We recognise that these heightened COVID-19 restrictions in Victoria are requiring many businesses and industries to make significant changes to their operations, and this includes the Victorian chicken meat sector. Chicken is a staple of many consumers' diets. This authorisation should assist the chicken meat sector to implement arrangements that maintain supply and minimise the risk of food shortages during the COVID-19 restrictions. We will be carefully monitoring the conduct of chicken processors under this authorisation, and it is our expectation that any arrangements do not disadvantage chicken growers. This authorisation does not override any contractual obligations processors have with growers. Additionally, our decision will assist the chicken meat industry to make arrangements that keep staff employed who would otherwise have been laid off or adversely impacted by the additional restrictions."
About the Inghams share price
Inghams is a producer and supplier of poultry products in Australia and New Zealand. The company was founded in 1918 and has grown to be one of the biggest poultry suppliers in Australia.
Earlier this month, Inghams announced that its processing plants in Somerville and Thomastown would be reduced to 33% capacity as a result of stage 4 restrictions in Victoria.
In May, Inghams announced that it was on track to deliver record earnings before interest, tax, depreciation and amortisation (EBITDA) growth in the second half of the 2020 financial year. However, the company also stated that it was uncertain how the final nine weeks of the 2020 financial year would impact earnings.
The Inghams share price is up 11.42% since its 52-week low of $2.89, however, it has fallen 5.85% since the beginning of the year. The Inghams share price is down 16.58% since this time last year.
