South Africa’s JSE-listed food retailer, Rainbow Chicken, admitted on Wednesday that the six months to end December 2012 had been some of the most difficult in the history of the South African poultry industry.
“The record levels of imports and high feed raw material input costs remain the major issues plaguing the industry,” Ranbow said in a statement.
“Imports at record levels of chicken (excluding Mechanically Deboned Meat (MDM)) for calendar 2012 increased by 14 percent over the high base of 2011 and now exceed the total volume Rainbow sells into the local retail and wholesale channels.”
Rainbow said the average monthly chicken imports over the past six months were 22 430 tons. The over-supply of chicken had led to pricing that is lower than three years ago in some months, despite the record high input costs.
The significant reduction in chicken margins had placed the local industry under severe financial stress, with a number of the smaller producers having closed their doors in the past year.
This crisis had led to the South African Poultry Association (SAPA) engaging extensively with government to find an acceptable solution that promotes fair trade while affording protection to local jobs.
In addition, droughts in Argentina and the USA had a significant impact on international maize and soya prices, with the extremely low stock levels in the USA heightening price volatility, Rainbow said.
These high prices were expected to continue until good crops in South America’s current season and better plantings in the USA’s upcoming season were realised.
“The two major issues facing the poultry industry, namely high levels of imports and record high raw material input costs, are unlikely to be resolved in the near term and will continue to suppress chicken margins,” the group said in a statement.
“The Group continues to explore opportunities in strategic growth markets in the food sector in South Africa and sub-Saharan Africa in line with its long-term aspirations.”