Chicken importers appear to be making fat profits from sales of mechanically deboned meat (MDM) ahead of an expected shortage because of the bird flu ban on poultry imports from Brazil.
MDM is used in the production of polony and sausages, and nearly all of it is imported from Brazil. The ban on Brazilian products will put a stop to that. The price of MDM is expected to go up, with resultant price rises in polony and sausages.
But not just yet. The ban was announced on 19 May and frozen shipments from Brazil can take six weeks and more to reach South Africa. So the supply, for the moment, is normal, import volumes are normal and importers are presumably paying normal prices for MDM arriving now but shipped months ago.
The bad news is that MDM prices are already going up steeply.
FairPlay challenged importers on this, after being told that meat processors were suddenly being charged R30/kg for MDM that used to cost R20/kg. It’s even worse than that, according to the importers themselves – MDM has gone up from R13/kg to R31/kg.
Importers will doubtless say it’s supply and demand – local meat processors are stocking up ahead of the coming halt to Brazilian imports. However, with import volumes unaffected for many weeks to come, their selling price – and profits – have suddenly shot up.
FairPlay founder Francois Baird said it appeared chicken importers were exploiting consumers by raising prices when imports were not yet affected.
“So what is the justification for the price increase? Is this a case of make as much as you can while you can?” he asked.
In an interview with ENCA, Baird also pointed out that, while supplies of MDM might be affected by the Brazil ban, the supply of chicken meat to the local market was not. South African producers already supply nearly all of the market needs and have said they can increase supply to make up for any shortfall.
FairPlay hopes the Competition Commission monitors MDM pricing, now and in the weeks and possibly months to come.
