South African poultry producers warn of price hike

The South African poultry industry has warned that poultry prices are likely to escalate in the coming year, due to rising feed costs becoming consolidated in production.

Kevin Lovell, the chief executive of the Southern African Poultry Association, said even though there was a surplus of grain, poultry prices would rise because the grain industry follows the US pricing structure.

“We must remember that maize is traded as a futures contract based on import parity and export parity,” he said.
Although prices were going up, if there was a shortage, prices would be much higher. Input costs had increased sharply and the industry, as well as retailers, should be raising prices. Lovell indicated that prices were likely to increase by 15%.

In their audited group results for the year ended February 28, 2011, Sovereign Foods said international pricing, together with the strength of the rand to the US dollar and to the Brazilian real, would determine the level of poultry imports and the pricing of these imports into South Africa.

Sovereign revealed that recent increases in the price of maize and protein were of major concern and the company expected that margin gains due to improved poultry prices would be mitigated by increases in the prices of feed components.

Source: Business Report