Lifestyle

Great news for chicken prices in South Africa

Staff Writer

 ·11 Sep 2024

Banking group Absa’s analysis in its Spring AgriTrends Report points to chicken and poultry price increases in South Africa finally easing after double-digit hikes over the past two years.

The group noted that a stronger rand and production growth in key markets—global suppliers like Brazil—could see price inflation ease to just 1% this year in some instances.

“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,” said Dr Marlene Louw, Senior Economist at Absa AgriBusiness.

“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.”

Louw said that this could, in turn, help keep price increases contained over the medium term, “which is good news for consumers.” 

While chicken accounts for roughly two-thirds of meat consumed in South Africa, about 20% of local consumption is serviced through imports – mostly frozen bone-in portions.

Thus, any supply interruption could have a meaningful impact on price movements, Louw said.  

In July of 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 tons 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,” Louw noted.

Amid growing calls for chicken pieces to be zero-rated, Louw said that while the importance of food affordability is acknowledged, it is also vital to note that 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 the prices and margins of other products in the meat complex.

Louw said that 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,” she said.

Average chicken prices (2021-2023) and price forecasts (2024-2027) in R/kg

This adds to the good news on food price inflation in South Africa, which has also

The latest Braai index, conceptualised by Bloomberg and compiled using the latest data from the Pietermaritzburg Equity Justice and Dignity (PMGEJD), shows that prices for a braai fell by 0.8% in July.

Prices were down 3.2% year over year. This continues the declining trend in pricing, meaning more affordable braais.

This is also broadly in line with the latest consumer inflation numbers from Stats SA, which showed that the Food and Non-Alcoholic Beverages (Food NAB) segment has been experiencing a slowing inflation trend since its recent high of 9.0% in November 2023.

The annual rate for Food NAB was 4.5% in July, down from 4.6% in June. It is at its lowest level since September 2020 (3.8%).

Looking at the PMBEJD’s full data—its full basket comprising 44 food items across the country—food inflation has been muted year-on-year, increasing only 2%, while month-on-month, prices have also come down.

Read: It’s a good time to braai in South Africa