Price for chicken meat goes up by 5%

THE PRICE of chicken has increased by 5 percent year-onyear as a result of higher prices in red meat and less supply by the local poultry producers.

Agricultural Business Chamber head, agricultural economist Wandile Sihlobo, said on Friday that the price of chicken has climbed to R44.36 per kilogram at the end of June.

“This price is also 2 percent higher than the May 2017 price,” he said.

In June last year the price of chicken was around R42.20 per kilogram.

Sihlobo added that it was not clear what could be the reasons for this increase.

However, senior agricultural economist at FNB, Paul Makube, pointed to the shrinking market supply of chicken locally as the reasons for the increase.

“We can point to domestic scaling back by local producers and slightly lower imports. The price of red meat also had an impact as it has been going up,” Makube said.

“The consumers then opt for chicken meat which is a source of protein for most consumers when the red meat prices go up, thus pushing the demand for chicken up which also leads to higher chicken prices,” Makube said.

The local cattle farmers have been building their stock following the drought. “The farmers are expected to slaughter fewer cattle than a year before and this pushes the prices of red meat up,” he added.

The local poultry producers listed on the JSE seem to be benefiting from this increase as the companies’ share prices are on an upward trend since the beginning of the year.

Sovereign Food recently announced that it has received a firm offer for its majority stake from a special purpose vehicle controlled by Capitalworks to acquire a controlling interest in Sovereign Food for R907 million in an all-cash buy-out.

The all-cash offer is priced at R12 per Sovereign Food share, much higher than the unsuccessful offer made by Country Bird of R9 a share last year.

Makube said the avian influenza might also contribute to the increase in the price of chicken in the next few months as some farmers had culled their chickens to prevent the spread of the disease.

“If the outbreak continues to spread, it will also contribute to higher prices in chicken meat,” he said.