Feed prices put pressure on South African poultry industry
Poultry producers in South Africa are experiencing
further negative affects from increasing poultry feed prices and oversupply,
which are proving to dent the industry, say Country Bird and Sovereign
Business Report stated that while the higher maize price has been a factor
for some years now - exacerbated by a higher global price - both companies say
there was oversupply of chicken in the market, contributing to unpleasant
Sovereign Food in February said that selling prices from December had been
lower than forecast â€œdue to significant import volumes over this periodâ€. The
company added that expected earnings per share for the year to February to be
35-45% lower than a year ago, as volumes were lower than expected, which the
company attributed to technical production delays.
Country Bird has stated that the poultry industry has achieved sustained
levels of growth and high margins for a considerable period. However, high feed
input costs together with oversupply has resulted in margins being reduced
across the board. The company managed to boost chicken volumes by 9% in the six
months to December. Net profit was down 14%.
Many chicken producers nationwide said that they had been unable to pass on
higher input costs to retailers, including supermarkets. A large supermarket
chain in the country, Shoprite, said that until December it had held back
passing on high food inflation in order to remain price competitive, but added
that this year it would be forced to pass on costs.
Imara SP Reid analyst, Warwick Lucas, said the local poultry industry would
probably operate at reduced margins for most of this financial year.
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