Warning over meat and chicken prices in South Africa

 ·6 Oct 2022

The Bureau for Food and Agricultural Policy (BFAP) has published its food inflation brief, highlighting the food items that have recorded the biggest price hikes in South Africa.

The BFAP brief provides an overview of food inflation dynamics, its associated causes, and the cost of basic healthy eating each month.

It features a Thrifty Healthy Food Basket (THFB), which measures the cost of basic healthy eating for low-income households in the South African context. The basket consists of a nutritionally balanced combination of 26 food items.

The methodology considers national nutrition guidelines, typical food intake patterns of lower-income households, official Stats SA food retail prices, and typical food requirements for a family of four – two adults and two children.

For August, the THFB was recorded at R3,270 a month, up 0.3% from July’s basket and up 11% from the basket in 2021.

Food expenditure as a percentage of total income spent on food edged up to 31.2%, from 31.1% in July, the BFAP said. This is based on a dual -minimum-wage income.

The bureau noted that food price inflation in South Africa remains lower than other countries – such as Kenya, the EU, Brazil, Zambia and the USA – but is tracking higher than China.

While the earlier inflationary pressures in developed economies were ascribed to pent-up demand after the pandemic, this was not apparent in South Africa, it said.

More recently, a range of supply-side disruptions, including droughts, heat waves, the Russia/Ukraine war, and soaring shipping costs, have resulted in broad-based inflation across the globe.

“In South Africa, this was exaggerated by the weakening exchange rate, which is why we see food inflation in South Africa catching up to food inflation in developed countries,” the group said.

Meat and chicken prices going higher

Worryingly, the high cost of feed grains as a result of the ongoing conflict has started to reflect in increasing prices for meat and poultry. Red meat prices in South Africa are already under pressure from low slaughter numbers, the bureau said.

“For cattle specifically, persistently high feed prices combined with elevated disease risks and economic constraints faced by consumers are resulting in lower throughput in the red meat value chain,” it said.

This has had a knock-on effect on poultry prices, which have seen significant increases over the past year as consumers steer away from red meat.

“As with beef, high feed costs are causing cost-push pressures, but in addition, high global poultry prices, due in part to disease outbreaks in key production regions, combined with a weak
exchange rate, are providing a conducive environment for a share of the cost pressures in the chain to be passed through to consumers in South Africa,” the group said.

“We expect these factors to remain at play as we approach the end of the year; thus, prices are likely to remain high.”

Due to limited scope for consumers to absorb further price increases, South Africa could see the rate of meat price increases lose momentum, translating into lower inflation rates for meat towards the end of the year, however.

Bread and cereal prices are significantly higher at 17.8%, but this is due to the slow rate at which prices tend to start reflecting issues in the sector, the bureau said. Thus, the prices reflect supply issues in June feeding through.

“Locally, this is exasperated by a weakening exchange rate, with fears of a global economic slowdown, increased incidences of load shedding, and an increasing global interest rate cycle weighing in on the value of the rand.

“Similarly, Oils and Fats increased by 37.6%, largely driven by the same factors as grains, and it is expected that inflation rates in these two categories will remain firm as we approach 2023,” the group said.

The following foods saw inflation above 10% in July:

  • Beef: offal, T-bone, brisket, corned beef, chuck;
  • Pork: ham;
  • Vegetables: beetroot, tomatoes, onions, cucumber, mixed veg, pumpkin, frozen veg;
  • Fats/oils: Vegetable oil, margarine;
  • Non-Alcoholic beverages: Ceylon tea, coffee, fruit juice;
  • Fruit: avocadoes, oranges;
  • Starch-rich foods: bread, pasta, sweet potatoes, cereals, noodles, white bread, pasta, brown bread, wheat flour;
  • Legumes: baked beans, dried beans;
  • Sugar-rich foods: sweets, chocolates;
  • Dairy: milk;
  • Fish: canned pilchards;

The following foods saw inflation more muted but still above the Reserve Bank’s target range, over 6%:

  • Pork: bacon;
  • Chicken: chicken portions;
  • Mutton/lamb: neck;
  • Beef: mince, stewing beef, fillet;
  • Sugar-rich foods: white sugar, brown sugar;
  • Dairy: powdered milk, yoghurt, sour milk;
  • Fruit: pineapple;
  • Peanut butter;
  • Vegetables: cabbage;

Read: What to expect from the rand, food and fuel prices for the rest of the year

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