Cape Town - The price of chicken has come into focus in the Competition Commission’s latest Essential Food Pricing Monitoring (EFPM) report, which found that when chicken imports from the EU were banned in response to the avian flu outbreak, domestic producer prices increased.
This is the eighth EFPM report since 2020, and it has a special focus on the feed-to-poultry value chain.
The commission said food price monitoring remains a priority as poor consumers spend a significant portion of their income on essential food items. “The feed-to-poultry value chain is highly concentrated, with five firms making up 70% of total chicken production, and the top two firms making up 50% of the market.
“Feed costs account for more than two-thirds of broiler production costs, and are therefore a source of upward cost and pricing pressure throughout the poultry value chain,” Competition Commission spokesperson Sipho Ngwema said.
Ngwema said some of the findings in relation to the poultry value chain include the price of grains and oilseeds used to manufacture animal feed, namely wheat, maize, soya beans and sunflower oil, which were volatile and had increased over 2021 and 2022.
“Over the same period, the price of poultry feed was relatively stable. It is forecast that raw material costs may fall over the first half of 2023. The commission will monitor the extent and degree to which these reductions are transmitted to feed prices, and ultimately to chicken prices at the retail level.”
He added that feed prices had increased faster than the producer price of IQF (individual quick freezing) products, which are the most widely consumed chicken products in South Africa and, despite this cost pressure, producers reported improvements in their financial performance – largely driven by high feed price.
SA Poultry Association (Sapa) general manager Izaak Breitenbach said current chicken prices were directly linked to raw material prices.
“Raw material prices have gone down since January, and if we look at chicken prices, they have also dropped marginally. The biggest cost is the feed cost, or the maize and soya cost, and that is 70% of our costs,” he said.
“One of the major cost drivers is load shedding, which is costing the industry almost approximately 75c per kilogram of meat produce.
There are several costs associated with farming, including infrastructure and water, especially in rural areas, where most farmers reside. The consumer is under pressure and we can see that, in terms of pricing as well, the total consumption of chicken is actually lower than we have seen last year.”
Siviwe Gude, an unemployed 30-year-old mother of two, said food prices had become a “headache”.
“It’s frustrating. I am unemployed and the only income we have is the child grant. We are lucky if we even eat chicken once a month, because everything is expensive. We honestly have it hard. It’s not just chicken; even milk prices are high. Sugar is another story. It’s all becoming a lot.
I understand we can’t just be handed free food, but some of the prices are ridiculous,” she said.
Cape Times