The costs to South African poultry producers of the latest outbreak of avian influenza (bird flu) are already mounting.
Quantum Foods, the only egg producer listed on the local stock exchange, has issued a trading update giving details of the outbreak last month at its Lemoenkloof layer farm in the Western Cape. Lemoenkloof was one two layer farms where outbreaks occurred and birds were culled.
Quantum said its farm had housed 420 000 layer hens, all of which had to be culled, resulting in a direct loss to Quantum of R34 million.
It also advised shareholders that, for the first six months of its financial year, headline earnings would be between 76% and 87% below the same period last year. The results are due to be published later this month.
This shows that egg producers are suffering, just as their colleagues in the chicken business are. Astral Foods, the country’s largest chicken producer, has warned that its half-year results will be down by between 87% and 92%.
Quantum’s bird flu losses also point to the need for the South African government to rethink its refusal to compensate poultry farmers for healthy birds ordered to be culled in bird flu outbreaks. Over the last two years, some 3.8 million chickens have been culled to prevent the spread of bird flu.
The combined losses for chicken farmers, large and small, will run into billions. That is not a cost they should have to bear on their own.