Chicken Industry

Rainbow results show tough times for local industry

The tough times facing South African poultry producers were illustrated in the interim financial results of RCL Foods, owner of the country’s second-largest producer, Rainbow Chickens.

Despite higher revenues for the six months to December last year, higher input costs and rotational power cuts (load shedding) led to lower profits. No dividend was declared for shareholders.

Astral Foods, South Africa’s leading poultry producer, has already warned that when its interim results are released in May, earnings could be down by 90% on the previous year.

RCL said its lower profits were largely attributable to declines in Rainbow and its baking division. Trading conditions for the six months had been challenging.

“Sustained high commodity input prices, above-inflationary increases in other costs and unprecedented levels of load shedding had a notable impact on the current period,” the company said.

These are large companies, with substantial balance sheets, and can withstand temporary setbacks. Smaller companies, and particularly small-scale poultry producers, are going out of business and retrenching workers. 

Despite some successes, there is a long rough road ahead.