Listeriosis hits bottom line

‘Situation was dire, and pig farmers were on the verge of closing down’

SOUTH AFRICA’s processed meat industry has shed about 2 000 jobs while bleeding R800 million monthly as safety concerns following the outbreak of listeriosis sent the prices and demand for readyto-eat meats tumbling.

This is according to the South African Meat Processors Association (Sampa), which said of the 2 000 jobs lost, 700 were in KwaZulu-Natal.

The job losses suffered by workers in the meat-processing industry come as the country continues to battle unemployment.

The recently released quarterly labour survey showed that the unemployment rate (26.7%) remained unchanged over the first quarter of this year compared with the fourth quarter of last year.

The unemployment rate was highest among the youth (ages 15-34) as it stood at 38.2%.

The association said sales of polony and viennas had fallen 70% while those of other processed meat products had declined 50% since March 4, after Health Minister Aaron Motsoaledi announced that ready-to-eat meats were the source of the deadly listeriosis disease.

If the situation persisted, Sampa warned, it was bound to have a serious knock-on effect on other businesses such as packaging, transport and spice businesses. They were already losing close to R100m a month.

“Small butcheries are also adversely affected as consumers are no longer buying processed meat,” said Arnold Prinsloo, acting Sampa chairperson. Meat processors warned of more job losses if the situation continued.

Prinsloo said pig farmers were among the worst affected. “Should the situation continue, farmers will sell at a loss and small farmers will lose their farms. The knock-on effect will further create a pork shortage in the next 12 to 18 months.

“This shortage in supply will push up pork prices to an estimated price of R30 per kilogram,” he said.

The association said there was a huge reduction in the demand for pork and this led to a drop in pig prices from R26 a kilogram to R16 a kilogram.

Walter Frey, owner of Trigga and Frey’s Food Brands, said the situation was dire, adding that up-and-coming pig farmers were on the verge of closing down.

“Smaller and vulnerable farmers would probably only last two to three months at current pricing levels, assuming they were able to even sell their pigs,” he said.

Frey believed the full recovery of the pork industry would take many years.

Dawie Maree, of FNB Agriculture, said the loss would be felt greatly by small farmers who did not have the cushion enjoyed by big operators.

He said while the entire pork industry value chain had suffered an estimated R1bn in losses, this would not have much impact on the country’s agriculture economy as the industry was very small.

Pork prices had fallen about 40% since the listeriosis outbreak announcement, but this also meant that pork had become more affordable and had thus created an opportunity to increase pork consumption, he said.

“The decline in the price of pork is mainly because pork is associated with polony, when in fact polony only consists of about 2% pork.

“The recovery will depend on educating the public and changing the perception about pork.

“I know that the South African Pork Producers Organisation has embarked on a big drive,” Maree said.

Frey said pig farmers were in need of support whether it came from government or the private sector.

He recently pledged R100m that would guarantee a floor price of R20 a kilogram for pig farmers on an online trading platform that connected buyers and sellers of pork.

“The Trigga platform has managed to redistribute demand to find a market for all surplus pigs available, albeit at R5 per kilogram below the cost of production and the guaranteed price mechanism put in place by Trigga to keep the most vulnerable farmers in business.”

He estimated that the current circumstances could last six months and that a guarantee of R20/kg would be sufficient to keep pig farmers afloat.

“Sadly, we’re getting to a point now that it’s no longer just about the price. It’s now also about helping farmers find a home for their product,” Frey said

Prinsloo said the industry was undertaking various measures to ensure the safety of products produced by its members.

“It (is) evident that food safety needs to be addressed in South Africa overall.

“Stakeholders and parties need to collaborate to address this issue, given its inherent complexity and understanding the far-reaching impacts. Food safety is everyone’s responsibility; this includes us as industry, other food industries, retailers, government and the public.”