Agriculture

Tough times ahead for SA’s chicken producers

Warnings of problems ahead for South Africa’s chicken farmers have come from two stock-exchange-listed producers who reported year-end results last month.

The issues relate not only to high – and still rising – costs of inputs such as feed, fertiliser and fuel, but to the problems associated with poor infrastructure. These include regular electricity outages, poorly maintained roads and, in at least one case, inefficient municipal water supplies.

This was highlighted by Chris Schutte, the CEO of Astral Foods, the country’s largest poultry producer, in an interview with TV programme ENCA. Astral had a good year, but Schutte said this would not continue.

High input costs and infrastructure deficiencies meant that Astral was subsidising its chicken customers and consumers by R3 per kg, which was not sustainable.

He warned shareholders and investors of “very tough times ahead for Astral as a poultry producer”.

In the ENCA interview, Schutte said that, because of local municipal water supply problems, Astral was trucking in water to keep its operations going.

Another poultry producer, Quantum Foods, did not have a good year, reporting a sharp drop in profits despite higher revenues. It cited “exceptionally challenging trading conditions”, including record high raw material costs, bird flu, labour unrest, rotational power outages and “excessive” costs of diesel and electricity.

Quantum said high raw material costs would flow through into Quantum’s income statement for the first six months of the 2023 financial year.