A Closer Look

The Insider’s Perspective – January

In our second Insider’s Perspective, Glen McMaster points out the highs and lows of January, with some questions for the year ahead

Wow! What a finish to a challenging year…..Let’s list some of the wonderful highlights…

* Continuous loadshedding
* Astronomical fuel price increases
* Utility increases
* National water supply disruptions
* Port congestion and delays
* Avian Flu

2023 was certainly not for the faint-hearted – and that’s saying a lot, considering the impact COVID
had on our industry. The champions of trade who overcame the overwhelming challenges and
finished the year with their businesses intact are heroes in my book.
The harsh reality is the market is facing yet another dilemma, one that most would say is unexpected
– but to be honest, we should expect anything these days.

Price drops and Lowered Demand

Let’s assess where we are at as of Jan:

Local IQF has been haemorrhaging and continues to face low-demand challenges: expect some
major losses for local processors. The fresh market is in the same situation with deals floating about
daily and over-supply weekly.

Wholesale Local Frozen prices as of December 2023 vs Jan 2024 (Injected):

* IQF Mixed Portions (6x2kg) @ R30.50 to R33.00 – Jan, Not much has changed but boy are we in for
a rough ride with price wars looming for cash flow
* Drumsticks @ R48.00 to R50.00 – Jan, R38.00 to R42.00
* Leg ¼ @ R37.00 to R38.50 – Jan, R30.95 to R33.50
* Wings @ R49.00 to R55.00 – Jan, R44.00 to R46.00
* Thighs @ R33.00 to R35.00 – Jan, R29.50 to R30.50
* Fillets De-boned/ skin off @ R48.00 to R50.00 – Jan, R41.00 to R43.00
* Whole Birds 1.3 to 1.5kg @ R36.00 to R38.50 – Jan, R30.00 to R33.00

Wholesale Local Fresh prices have dropped weekly. The best indication would be whole birds
trading at R38.00 to R40.00 in December and now trading from R31.00 to R34.00 in Jan.

Wholesale Imported Frozen prices as of November 2023:

* Drumsticks USA Jumbo @ R28.50 to R32.00 – Jan, Not much has changed
* Leg ¼ USA Smalls @ R33.95 to R36.95 – Jan, Not much has changed with the exception that supply
is limited
* Wings Argentinian @ R47.50 to R52.00 – Jan, Not much has changed, some B-Grades coming
through a little cheaper but that’s a niche market
* Thighs USA @ R28.50 to R32.50 – Jan, Not much has changed with the exception that supply is
* Fillets De-boned/ skin off Brazil @ R48.50 to R55.00 – Jan. Almost no supply currently with very
little moving through our local market.

The most confusing thing about the current market is that reports of the 30% to 40% drop in supply due to mortalities and day-old supply from Avian Flu is certainly not showing. The market glut and ongoing buildup seems to be rather alarming. Local suppliers cannot cry foul as imports have no bearing this time around. The truth of the matter is local is king and queen with little to no import interference, so where has it all gone awry?

  •  Panic buying – Did this create a slump as re-sellers scrambled in October and November to
    secure supply?
  • 30 to 40% price increases – has the consumer finally submitted and if so, what protein
    category has benefited from poultry’s decline?
  • Januworry – Are we feeling the aftermath of the festive spend?
  • Even with the impact of AI can reduced supply handle the normal demand? Time will tell
    and with expected normality by March/ April what can we expect?
  • Reduced imports/ Port Congestion – Unlikely as the prices being offered on imports have not
    been competitive for the last 6 months.

I personally believe it’s a combination of the above. Trends in SA are no longer predictable and we
have seen spikes and declines in the strangest of times. Local producers are blaming imports for
losses and market manipulation, Importers are claiming there is a place for all. The truth is, who can
locals blame now – and what will happen to importers in the future?

The summary of the challenges is not a fair depiction by any means, each side has valid points and
yet there is no solution in sight.

I do believe that some form of regulation could be a solution where responsible importing is
managed to subsidise local shortfalls. The issue of fair trade is always up for discussion, but to what
extent does government regulate and limit importers from doing business and remaining

The real issue for local producers is that they cannot compete on a global scale, they cannot access
foreign markets and they are late to the race anyway. The African continent is dominated by South
America, North America and the EU with SA having almost zero impact. The access of late into the
Middle East by a handful of South African brands has been fueled by Halaal requirements with
trustworthy sources. South Africa has found their niche but it isn’t enough.

South Africa has no offset, no alterative markets, no dumping options….our global and African
presence is dismal and a shared failure between processor and government.

The local processors’ innovation for ready-to-eat and further-processed happened far too late: the
global market was already occupied. The raw product is not an option as we cannot price ourselves
against agri-superpowers such as Brazil and the USA let alone the EU giants. We missed the boat on
niche and we missed the opportunity to create household brands that demanded a higher price. I
will commend one local processor who saw the gap, claimed their place and have never looked
back…You guessed it: Sovereign!!

So where to from Jan… ?

The year will be a challenge with re-sellers fighting for market share at even lower GP’s and
producers mitigating market highs and slumps. We are a hardy bunch but even the toughest have
their breaking point.

Food will always be consumed, no doubts there…..But the real question is who can match the
consumers budget and stay alive whilst doing it?

To read the last Insider Perspective, click here