Dark days and empty plates as SA food insecurity takes wing

Avian flu and load shedding are the foxes wreaking havoc in the South African henhouse, threatening chicken and egg shortages which could run well into next year.

Three of South Africa’s biggest poultry suppliers have lost hundreds of millions of rands due to the current highly pathogenic avian influenza (HPAI), aka bird flu, outbreak.

Then there’s the cost of diesel for load shedding.

In Astral Foods’ Stock Exchange News Services (Sens) update last Friday, the group warned “a significant cost impact from load shedding would continue for the remainder of the financial year ending 30 September”.

“These costs amounted to R741 million for the six months ended 31 March and forecasted R919 million for the remainder of the financial year (forecast provided in May 2023 of R844 million).

“The cost to operate diesel generators is now an embedded expense burden to the amount of approximately R45 million per month,” Astral noted.

“The total costs of load shedding, including capital costs of R200 million, for the Group for the financial year will amount to approximately R1.9 billion. This has been the main reason for the severe decline of Astral’s results for the year ending 30 September.”

Astral reported a backlog in the slaughter programme due to load shedding was cleared by the end of June.

However, the South African poultry industry was “being ravaged by an outbreak of (HPAI), with additional costs being incurred by Astral as well as other producers to cull broiler breeding stock in line with regulated disease control measures”.

The group said the losses extended beyond the biological cost of the culled birds and included costs relating to measures taken for the safe disposal of the affected birds and biosecurity measures implemented aimed at curbing the spread of the disease.

“The poultry industry in both the table egg and broiler sectors has seen significant losses as a new strain of bird flu (H7N6) has spread across both Gauteng and Mpumalanga at an alarming rate.

“The bird flu has already caused short supplies of table eggs … and it is expected that the supply of poultry meat into the value chain could be affected negatively in the coming months.

“The bird flu outbreak is the worst SA has witnessed and goes well beyond the impact felt by the H5N8 bird flu in 2017,” said Astral.

“To date, the total cost associated with the current bird flu outbreak amounts to about R220 million.”

Minister in the Presidency Khumbudzo Ntshavheni told a post-Cabinet media briefing yesterday: “The outbreaks pose food security risks, and trade measures in the form of imports to manage availability of fertile eggs, table eggs and poultry meat may be implemented.”

He said the department of agriculture, land reform and rural development (Dalrrd), the SA Health Products Regulatory Authority and the industry were exploring applications for the registration of possible vaccines, with compliance measures relating to safety, efficacy and quality being paramount for their registration.

A Quantum Foods Sens advised its shareholders HPAI had been detected at several of the company’s farms in Gauteng and the North West, affecting about 1.5 million layers and breeding stock.

“Shareholders are reminded that an HPAI outbreak also affected approximately 420 000-layer birds at the Lemoenkloof layer farm in the Western Cape in April 2023,” it said.

“The overall impact of the HPAI outbreak on the South African poultry industry, and its full financial effect on the company, is not yet known as this will be dependent on, inter alia, the volume of eggs available for sale going forward, however, as at 21 September, the estimated value of the company’s birds affected by the outbreak is [about] R106 million.”

Quantum said in May that HPAI “will result in a further reduction in egg production and additional costs being incurred to supply the Western Cape market with eggs for the remainder of FY2023”.

In its operational update for the four months ended 31 January (current period), the group noted “energy costs … increased by R19.4 million (42.2%) when compared to the previous period, which include an increase of R17.6 million in generator fuel expenses”.

RCL Foods, which owns Rainbow Chicken said in its Sens 11 of its 19 sites in the inland region had been affected by the virus.

“The outbreak has moved at a rapid pace and the situation is constantly evolving. To date an estimated 410 000 birds have been culled, which has resulted in an estimated financial impact of R115 million,” RCL said.

“Rainbow is taking all necessary steps to contain the spread of the virus, which includes working with the Dalrrd to gain registration and approval for suitable vaccines.”

RCL said it was essential to acknowledge “there is tension in the supply chain”.

Ntshavheni said control measures to manage the spread of the bird flu were in place and farmers were encouraged to observe prescribed biosecurity measures.

The Western Cape and KwaZulu-Natal have experienced outbreaks of HPAI H5, while HPAI H7 has been reported in Gauteng, Limpopo, Mpumalanga and North West.

Additional reporting by SAnews.gov.za