Due to the avian influenza in the poultry industry just as it was starting to recover from drought – which saw many commercial and particularly small farmers struggling to keep up with the increase in the price of feed – the price of eggs is set to increase further.
According to the latest data from Statistics South Africa (StatsSA), the price of eggs increased by 8.5% year-on-year during October 2017. This trend is likely to continue in the short to medium term as supply shortages are likely to last up to a year.
Supply down, demand remains unchanged
The impact on South Africa’s consumer is likely to see egg prices increase in the range of 15% to 20% in the next few months. The industry has already recorded a 12% y/y decrease in the average weekly egg production during September 2017, according to the SA Poultry Association (SAPA). The cost of egg distribution is also likely to increase following the recent fuel hike which will eventually be passed on to the consumer. Demand will, however, not change very dramatically with per capita consumption remaining around 7.9kg per person per year.
The upside is that the price increase will help producers to recoup losses as they are still servicing debt incurred during the last drought. It will further place them in a better position to repopulate and increase their production which will eventually benefit the consumer in terms of an affordable source of protein. But it is bad news for the consumer.