Price for chicken meat goes up by 5%

The Star Early Edition - - NEWS - Sandile Mchunu

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.

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