Listeria put pork prices in a slump

DISEASE SCARE: INDUSTRY MAY HAVE LOST OVER R1BN

Low producer prices is a trend that will hold over short term with further decrease possible in long term.

South Africa’s pork industry has taken a heavy blow as the listeria scare sent prices tumbling and created a supply glut that the industry is still struggling to recover from.

Paul Makube, senior agricultural economist at FNB’s agri-business, said the loss to the value chain could exceed R1 billion.

Pork prices fell by almost 30% to 40%, from R30 to R23, in a matter of months at Country Meats in South Africa, according to Sernick Group chief executive Carel Serfontein.

The listeriosis scare had an impact on the sales of pork in particular, since fewer pork products were being produced by cold meat producers, said Serfontein.

When news of the listeria outbreak surfaced in early March, Health Minister Aaron Motsoaledi called for all processed meat products, including polony and cold meats, to be taken off retailers’ shelves as a precautionary measure, which caused an unexpected dent in the pork industry.

Johann Kotzé, chief executive of SA Pork Producers Organisation (Sappo), said that prior to the announcement the pork industry was performing well, prices were good, demand was high and the price of feed – maize – had also decreased, meaning that production costs had fallen.

However, when Motsoaledi instructed consumers to avoid all ready-to-eat meats, there was a sudden drop in prices because the perception in the market was that pork is an ingredient of all cold meats.

“The minister never said pork was an issue, but the perception out there was that pork was involved, so we had a sudden drop in price,” said Kotzé.

The most affected was Tiger Brands, which produces Enterprise polony and viennas. The company had to close four facilities after traces of the bacteria were found on its premises.

Kotzé said people had associated Enterprise processed meat products with pork and after that 12% of the pork industry’s slaughtering was affected. “When you put fear into an industry, people react immediately.”

However, the flip side to the story is there has been a renewed appetite for pork products as other meat products get more expensive. Makube said that overall, meat prices remain high and when pork is excluded, meat prices at the producer level are at about 6% higher than last year. However, if pork is included it is marginally down compared to last year.

Makube said the decreased price of pork against the higher price of other meat products will most likely lead consumers to settle for pork as an alternative.

“In the end, consumers continue to benefit from the low producer prices for pork, and this is a trend that will hold over the short term with the possibility of a further decrease in the long term,” he said.