Chicken prices likely to fly high for some time

23 Mar 2023

05 March 2023
Business Maverick
by Georgina Crouth

Poultry producers need to look beyond South Africa’s borders to offset economic pressures at home, where domestic consumers are under increasing strain, says the SA Poultry Association (SAPA).
That’s because power outages have increased the cost of producing birds, and the industry has done all it can to mitigate against the consequences. So, consumers must expect to pay more for poultry products.

Central to food security in SA, poultry producers have been forced to absorb the cost of doing business in SA, where rolling blackouts have had a material impact on their bottom line. The association has now called for the scrapping of VAT on chicken as well as chicken feed, to provide relief for farmers and SA’s most vulnerable consumers.  More than 50,000 people are directly employed by the country’s second-largest agricultural subsector (after maize), with many more employed along the value chain. Its contribution to food security centers on its ability to provide an affordable source of protein to South African consumers; in 2021, chicken accounted for 66% of the country’s total meat consumption.

At the State of the South African Poultry Industry media roundtable, the association said the sector was bedeviled by troubles in 2022: the war in Europe, which caused a steep rise in feed and input costs; the suspension by the Department of Trade, Industry and Competition of the implementation of anti-dumping duties – despite being warned by the International Trade Administration Commission that doing so would cause material harm to the industry; and avian influenza outbreaks.

South African producers weren’t slaughtering fast enough either, owing to rolling blackouts, which have added significant pressure to producers’ bottom line because of extra feed costs. Older birds, while they are still growing, do so at a slower rate, which exacerbates the feed conversion cost.

On the upside, despite the collapse of state infrastructure and unfair competition from countries dumping product into our markets, the poultry sector says it has accelerated growth “exponentially” over the past three years. The domestic poultry industry is today worth R59-billion. SAPA’s Poultry Sector Master Plan called for an investment of R1.5-billion to be concluded by 2022, but the sector has already surpassed that call, with an investment of R1.8-billion last year and an extra R600-million earmarked for investment by the end of 2024.