Warning over high meat prices in South Africa, and why chicken is on the menu right now
South Africa’s real gross domestic product (GDP) decreased by 0.7% in the second quarter of 2022. The biggest contributors to this contraction were agriculture, forestry & fisheries, down 7.7%, and pulled lower by a decrease in the production of animal products.
Compared to the second quarter of 2021, however, the sector contracted by 20.9%, noted the Bureau for Food and Agricultural Policy (BFAP). This follows a slower summer crop harvest, and a sharp rise in input costs, which more than offset revenue gains.
The largest contributor to agricultural revenue in the second quarter is the animal products sub-sector, where revenue expanded by 19% compared to Q2 of 2021. Field crops showed a decline of 14% compared to the same period of analysis in 2021, while the horticulture subsector 11% in Q2 of 2022 compared to the same period in 2021, the bureau said.
During the same period of analysis, sheep slaughter continued to drop showing a 6% decline while that of cattle rose slightly by 2%. Although the price of pork dropped by 7%, the rise in slaughters offset the price drop resulting in the industry revenue growing by 15% y-o-y, it said.
BFAP said that in a period of high red meat prices, poultry remains an affordable source of animal protein.
“The gross value of production for chicken grew by 15% while that of eggs grew by 26% in the second quarter of 2022 compared to the same period in 2021, mostly underpinned by price gains,” said the group.
Importantly, it said that the high prices that were realised in the field crop sector are also key cost drivers for animal products that rely heavily on feed. “Consequently, while revenue from animal products increased by almost 20%, the sector faces enormous cost pressures, which limit GDP growth.”
The agricultural sector as a whole has been affected by global disruptions, such as the war in Ukraine, to commodity supplies, as well as logistical challenges as economies recover from the pandemic.
The BFAP’s recent food inflation brief highlights the food items that have recorded the most significant price hikes in the country. In terms of meat prices the following changes were recorded:
Above 10% in July:
- Beef: offal, T-bone, brisket, corned beef, chuck;
- Pork: ham;
Over 6% in July:
- Pork: bacon;
- Chicken: chicken portions;
- Mutton/lamb: neck;
- Beef: mince, stewing beef, fillet;
Although chicken reported a 6% increase, it is still much cheaper than many beef derivatives and ham.
The United States Department of Agriculture, in collaboration with the Global Agricultural Information Network in a study of South Africa’s agricultural industry, found that consumers are forecast to eat 2% more chicken in 2023.
“South Africans will consume more chicken as a result of projected price increases for other proteins like beef and lamb.”
It is more affordable in comparison to other meats, which may push middle-class consumers towards this protein source, said the report. “Although pork can compete with chicken in terms of affordability, it is not consumed by a large part of the population because of religious reasons.”
Dr Johnny van der Merwe, managing director of AMT, an agricultural market trends analysis company, told Farmers Weekly, that although poultry prices were trending higher this year than in 2021, demand continued to rise for chicken meat.
“This time of the year, we also start seeing more functions, events, weddings, [followed by] the festive season, which will increase the demand for chicken and pork further, resulting in higher prices.”
