Poultry Analysis

Russia, South Africa Face Thorny Economic Issues as Political Tensions Spark

‘Race to the bottom’ in food prices

The overriding public issue this week was the relationship between Russia and SA, and the future of the AGOA agreement with the US as the relationship between the ruling party in South Africa and the US government becomes hostile. It is a fast-moving story and the implications will only become clear over time.

Domestically, though, the issue of rocketing food prices still dominates the discussion, with some positive developments and some alarm bells. The country’s largest poultry producer, Astral Foods, has announced that it expects a massive drop in profits. This kind of announcement always precedes price increases.

Another large producer, RCL Foods, that produces poultry along with other branded foods, has announced a full return to operating capacity at their Hammarsdale processing plant in Durban. This might be good news for supply, but is might be balanced by loadshedding and the electricity price increase.

The largest egg producer in South Africa has been hit severely by HPAI (Avian Flu) which has resulted in the culling of hundreds of thousands of birds. This will have an impact on the price of eggs.

Eskom Price Hike

On top of avian flu and loadshedding, the Eskom price hike of 18.5% is going to add to the pain.

Unfortunately, rising prices will add to the burden of the lower-income consumer who already spends a disproportionate amount of their income on food, and this raises the spectre of food riots.

International trade is always a set of trade-offs, with countries trying to balance their own interests against larger global issues. So when the EU announced they would introduce a set of ‘carbon-offset’ tariffs against imports that they regarded as carbon-intensive, it was viewed as a thinly-veiled attempt to protect Spanish oranges against South African competition. However, it would also have had an impact on poultry exports.

The Association of Importers and Exporters (AMIE) cheered the government’s opposition to this move. The Trade and Industry Minister described them as ‘unhelpful’ and a ‘green trade barrier’. AMIE’s CEO Paul Mathew said that any tariffs were a move towards protectionism. AMIE believes that all tariffs add costs to business which ultimately harm the consumer.

Despite all the negative news, there is always something hopeful.

Food Security in South Africa

Prof Kenny Mnisi believes that small-scale poultry farming would make a huge contribution towards food security in South Africa.  In an online presentation, he said that poultry farming was an ideal entry-level agricultural activity – it was fast and affordable.

At the same time, Buhle Farmer’s Academy has launched a school nutrition programme (SNP) to train 500 community farmers across Mpumalanga to produce eggs to be supplied to school feeding schemes.

And electrical engineer Balebetse Portia Mdluli decided to empower women from her district by starting a chicken farm, and she has lessons to share about how to do it.  An inspiring story (read here).

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