13 September 2024 – A stronger rand and robust growth in production by key global suppliers, such as Brazil, could see the average price of chicken products increase by just over 1% this year in some instances, financial services firm Absa’s ‘AgriTrends Report Spring edition’ shows.
Poultry price increases are expected to ease, after double-digit hikes over the past two years. “In recent times, the outbreak of diseases like Avian Influenza has caused a global shortage of this protein source, which put upward pressure on prices,” says Absa AgriBusiness senior economist Dr Marlene Louw.
“While potential new disease outbreaks may change the price outlook going forward, all things being equal, we expect that lower feed prices will improve margins for producers, which could stimulate supply. This could, in turn, assist in keeping price increases contained over the medium term, which is good news for consumers,” she says.
Chicken accounts for roughly two-thirds of meat consumed in South Africa, with about 20% of local consumption served through imports, mostly frozen bone-in portions. Thus, any supply interruption could have a meaningful impact on price movements, Louw says.
In July this year, Brazil experienced a case of New Castle disease and, although it was an isolated incident, trade was suspended for 21 days.
“With around 400 000 t of chicken being exported out of Brazil each month, the event highlighted the importance of Brazil as a key exporter servicing the global market.
“South Africa is especially vulnerable to export disruptions out of Brazil. In 2023, more than three-quarters of chicken imports to South Africa came from the Southern American agricultural giant,” she notes.
Further, there were growing calls for chicken pieces to be zero-rated. However, while food affordability is important, a change of this nature could have unintended consequences.
For example, relative price changes of products in the meat complex are likely to alter consumption patterns, which could impact prices and margins of other products in the meat complex, she highlights.
Policies that support and enable efficient broiler production, such as effective and agile disease management and sound service delivery, would also limit price increases of chicken products.
“This would likely have a less distortive effect on relative prices and margins and contribute to providing consumers with price relief,” says Louw. Source: Engineering News)
