- A record breaking petrol hike, the deteriorating rand-dollar exchange rate and the decline in business confidence mean chicken prices are likely to see a steep increase.
- Poultry, like other food, is transported many times from the moment it leaves the port or farm, to consumers, and each trip has become pricier.
- This year, the transport industry was also impacted by the riots that took place in KwaZulu-Natal and Gauteng in July and most recently by the N3 truck protest.
Consumers are in for a chicken price shock in 2022, as with transport costs add pressure to an industry that is already grappling with increasing feed and labour costs, says Gavin Kelly, CEO of the Road Freight Association.
Kelly said the record-breaking petrol hike, the deteriorating rand-dollar exchange rate and the decline in business confidence mean chicken prices are likely to see a steep increase.
The CEO explained that poultry, like other food, is transported many times from the moment it leaves the port or farm, to consumers, and each trip has become pricier.
"During harsh lockdown, when only the essentials were allowed to be transported, obviously the prices went up. Unfortunately during that time a number of transport companies went out of business, and this had an overall impact on supply and demand," he added.
This year, the transport industry was also impacted by the riots that took place in KwaZulu-Natal and Gauteng in July and most recently by the N3 truck protest.
Kelly said truck damage or transport disruption increases risk, which leads to higher prices. And although the July riots were an anomaly, business sector confidence had dropped.
"It was anarchy, we would never have believed that we would see the kinds of looting and mayhem that went on. And so, when the business community loses confidence they take more precautions against risk," he said.
As a result, the cost of business goes up and the costs are passed on to consumers, he said, adding that the price spike following the July riots may have been the beginning of a price increases across the board.
With regards to insurance, Kelly said premiums for the South African Special Risks Insurance Association, which provides riot cover, are likely to increase by 1 000%.
Meanwhile, the International Trade Administration Commission (Itac) has increased provisional anti-dumping duties on poultry from Brazil by 265%, Ireland 158%, Poland 97%, Denmark 158% and Spain by 85%. These duties have been implemented with immediate effect and will stay in place until June 2022.
These provisional duties are for bone-in chicken imports like drumsticks, thighs and leg quarters from EU exporters. The duties for Brazil apply to bone-in chicken portions and breasts.
"South Africa’s poultry industry has been plagued by the long-term impact and challenges posed by the dumping of chicken into our market. This has been devastating to South African producers. Our spirits are buoyed by this announcement as the industry has highlighted this problem for many years," said Aziz Sulliman, chairperson of the South African Poultry Association, in a statement on Tuesday.
Itac found that dumping had an impact on the local poultry industry, following an anti-dumping duty application by the industry in February.
Sulliman added that Itac’s findings were a positive step towards curbing illegal chicken trade.