Meat and chicken prices could spike as avian flu and foot-and-mouth disease disrupt food industry

CapeTalk's Lester Kiewit speaks to Thabile Nkunjana, Senior Economist in the Trade Research Unit for Markets and Economic Research Division of the National Agricultural Marketing Council.

Listen below:

A combination of what some have described as "a perfect storm of factors" has led to a temporary chicken and meat supply disruption which could see the price of chicken, red meat, offal, and processed meats spike, according to reports from the food industry.

The “triple whammy” which has hit the local market over the past few weeks is: The ban on the imports of chicken from Brazil where some regions have been hit by avian flu. A crisis at Daybreak Foods, one of South Africa’s largest integrated poultry producers, which has entered business rescue after being forced to cull 350 000 starving chicks. And, finally, the recent diagnosis of foot-and-mouth disease in animals on feedlots of Karan Beef.

Nkunjana says this is a "big blow for the industry" as Karan Beef supplies a lot of meat across the continent. The supplier had to cut off exports immediately and reduce the scale of operations.

"That means, for now, there'll be a temporary influx of beef for some time and the lower this continues, it will have implications for the supply and that will come down to the prices which will have to escalate should we not be able to address the issue but there are measures being put in place to try to control the issue by the State and the industry itself..."

- Thabile Nkunjana, Senior Economist - National Agricultural Marketing Council

On shelves, for consumers, this will translate in the price of red meat being lower before jumping to higher prices because of initial oversupply as Karan Beef is not exporting to foreign markets right now.

However, over the next four to five months, consumers might see an increase in prices of particularly red meat because supply will decrease, Nkunjana explains.

"For now, there'll be an influx because of oversupply but the supply will decrease because the supply will drastically change..."

- Thabile Nkunjana, Senior Economist - National Agricultural Marketing Council

Nkunjana also explains that the limited chicken and beef supply will also impact amounts of offal such as chicken feet, necks and livers.

"The focus has been mainly on the mechanical deboned meat but there is under-communication on other poultry and meat that comes from Brazil that is the offal meat that is the internal organs, some chicken feet, necks, and livers are some of the top products that lower-end consumers purchase which Brazil supplies a lot of..."

- Thabile Nkunjana, Senior Economist - National Agricultural Marketing Council

"... this creates an issue that I feel hasn't been communicated properly because we are focused on the larger portion Brazil supplies... but we have overlooked the portions that lower-end consumers in South Africa consume and that will have economic implications..."

- Thabile Nkunjana, Senior Economist - National Agricultural Marketing Council

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