Absa AgriTrends 2022

South Africa is reliant on exports for around 20% of domestic chicken consumption. In this regard, local market dynamics are closely tied to global price dynamics and exchange rate movements. Since mid-2020, global poultry product prices have followed an increasing trend on the back of high input costs and supply constraints related to disease outbreaks in the EU but also more recently in the US and Canada. This filtered through to local prices which were further amplified by a weakening exchange rate and broad-based local input costs pressures ranging from increased cold storage costs to packaging and labour. The increasing price trend is apparent since May 2020 (see Figure 3.6 below). Disease issues are limiting global poultry supply

Patel from the Department of Trade and Industry suspended import/anti-dumping tariffs on chicken imports from Brazil and the EU for one year. Although the EU has limited exportable supplies due to the disease issues mentioned above, cheaper Brazilian imports will be beneficial to consumers over the next year but are likely to put pressure on margins in an industry already under pressure due to high input costs. In the years leading up to 2018, high levels of chicken imports entered South Africa. With import tariffs being introduced from 2018 onwards, this has decreased markedly (see Figure 3.7). As mentioned concerns are now building that the suspension of tariffs could lead to increased imports, especially from Brazil, whose chicken exports to South Africa decreased by 21% between 2017 and 2021 due to imposed import tariffs. Global shortages of poultry products, as a result of disease outbreaks have however kept global prices high and to date, an influx of cheap imported products seems limited.

In response to the high prices and food affordability concerns, Minister Ibrahim

Broiler Product Prices

JAN 2019-JUL 2022

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Source: Absa AgriBusiness, 2022


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