SA egg shortage sends prices scrambling
By Ray Mahlaka and Aarti Bhan - Dec 15th 2017, 10:48
The flu virus takes its toll.
SA is in the throes of an egg shortage and breakfast has become more expensive lately.
Egg costs are surging and showing no signs of declining as SA’s farmers battle with an avian flu outbreak resulting in the culling of millions of egg-laying hens. About 4.7 million egg-laying hens have been culled since the outbreak in June this year, affecting 13 egg farms, mostly in the Western Cape.
The flu outbreak has led to more than 1 000 direct job losses and reduced SA’s egg production by 3.9 million eggs a day, according to the SA Poultry Association. Observant shoppers would have recently noticed egg shortages on retail shelves and the increase in the price of eggs, which is considered an affordable source of protein.
The average price of a tray of 18 eggs cost 16.9% more in November 2017 compared with the same time last year, Statistics SA data indicated. In rand terms, SA’s average egg prices (carton of 18 eggs) rose from R36.49 to R42.65 over the same period. Inflation for eggs in October was 4.8% year-on-year.
The Western Cape has emerged as the most expensive province to purchase eggs, with the average price for a carton of 18 eggs being R46.85.
The Western Cape has been hit the hardest by the avian flu virus as about three million egg-laying hens have been culled. Industry estimates showed the Western Cape has the largest distribution of chickens and eggs in SA with an estimated market share of 21.9%.
The on-going severe drought in the Western Cape has seen smaller egg farmers exit the industry over the last two years as higher feed costs knocked their profitability. As a number of egg farms went bust, the shortages were exacerbated due to the lower number of egg production farms that could supply the SA’s national demand.
SA’s average egg production for 2017 is expected to the lowest in five years at 379 000 cases per week, data from the South African Poultry Association showed.
Some retailers in the Western Cape have been forced to import eggs from other inland regions, said Dr. Charlotte Nkuna, the interim CEO at the SA Poultry Association. “The Western Cape can continue to import eggs as eggs can move without restrictions from any unaffected farm [by bird flu] to anywhere else in the country,” she said.
Nkuna said the spread of the avian flu virus – which originated from the droppings of waterfowl carrying the virus and is not harmful to humans – is under control and showing signs of tapering as temperatures continue to rise, which helps keep the virus in check.
But this doesn’t necessarily mean that the price of eggs will ease anytime soon.
Paul Makube, the senior agricultural economist at FNB Business, expects egg prices to increase between 15% and 20% from December 2017 to June 2018. “The increase in egg prices is subject to demand and supply dynamics. If there is a limited supply of eggs then sellers and buyers will scurry to procure eggs,” Makube told Moneyweb.
He said egg farmers and retailers will pass costs to consumers given the December petrol price increase of 71 cents per litre, which will make it more expensive to import eggs from other inland regions.
Although SA’s big retailers remain confident that they can meet the demand for eggs, cash-strapped consumers have not been immune to price increases. Richard Stockley, the head of innovation at Woolworths Food, said there is currently full availability of eggs at stores. However, Woolworths had to make a “slight price adjustment” due to the avian flu outbreak.
Meanwhile, Pick n Pay also adjusted egg prices and didn’t launch promotional specials on eggs to stabilise demand. “Prices are now stabilising,” said Brian Austin, the head of groceries and perishables at Pick n Pay. Austin said Pick n Pay stores are working with suppliers to remain fully stocked.
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