South African consumers may finally get some relief as chicken price increases are expected to ease in 2024. This is according to the latest Absa AgriTrends Report, which highlights a projected stabilization in poultry prices following significant hikes in recent years.
The Spring edition of the report, released by Absa AgriBusiness, notes that a stronger rand and increased production by major suppliers like Brazil could result in only a 1% rise in the average price of chicken products by the end of the year. This comes after two consecutive years of double-digit price hikes.
Read: Inflation in South Africa eases to 39-month low in July
Global production boost to help stabilise prices
One of the key factors expected to contribute to the easing of chicken prices is the improved global supply. Dr Marlene Louw, Senior Economist at Absa AgriBusiness, explained that while disease outbreaks, such as Avian Influenza, have caused disruptions in the past, the situation is beginning to stabilise.
“In recent times, the outbreak of diseases like Avian Influenza has caused a global shortage of this protein source, which put upward pressure on prices. While potential new disease outbreaks may change the price outlook going forward, all things being equal, we expect that lower feed prices will improve margins for producers, which could stimulate supply. This could in turn assist in keeping price increases contained over the medium term, which is good news for consumers,” said Louw.
The report also highlights the importance of Brazil as a key global supplier of chicken, exporting around 400,000 tons of poultry each month. In July 2023, Brazil experienced an isolated case of Newcastle disease, which temporarily halted exports for 21 days. Given that more than 75% of South Africa’s chicken imports come from Brazil, any disruption in Brazil’s supply chain has a significant impact on local prices.
Impact of potential tax changes on chicken prices
The report also touches on the ongoing calls to have chicken pieces zero-rated for VAT in South Africa. While this could make chicken more affordable for consumers, Louw warns that such a move may have unintended consequences.
“The importance of food affordability is acknowledged, but a change like this could have broader impacts, including shifting consumption patterns and affecting the prices and margins of other meat products,” she added.
Instead, Louw advocates for policies that support local broiler production through efficient disease management and improved service delivery, which could offer a more sustainable approach to keeping chicken prices stable without distorting the broader meat market.
