Avian influenza, rising costs weigh on SA poultry industry, Sapa says

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The South African Poultry Association (Sapa) has stated that it remains focused on supporting the industry as it navigates these difficult conditions.

The poultry sector, valued at R65bn, has become a cornerstone of South Africa’s agricultural economy. It is the second-largest agricultural industry in the country and the largest employer, with nearly 58,000 people across the value chain.

Despite making substantial investments to increase slaughter capacity from 19.5 million to 22.5 million birds per week, the industry is currently only slaughtering 21.5 million birds weekly.

This is due to several factors, including farms still recovering from the 2023 HPAI outbreaks, cautious farmers, and the increasing pressure from imports.

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Key issues facing the industry include the delayed rollout of avian influenza vaccinations, ongoing trade challenges, rising feed costs, and the economic impact of a weaker rand against a stronger dollar.

Avian influenza vaccination

The South African poultry industry’s efforts to implement widespread vaccination against avian influenza have faced significant setbacks. No farm has yet been able to meet the stringent biosecurity protocols required for vaccination approval, leaving the sector vulnerable to another wave of HPAI outbreaks.

The risk indicator remains high, as the disease is also affecting countries across Europe and the United States.

In the 2023 outbreak, two strains of HPAI, H5N1 and South Africa's H7N6, caused severe damage. Although three vaccines for the H5 strain have been approved for import, the testing protocols for H7 vaccines mean they are months away from approval.

Sapa says it is engaging with the government to secure support for compensation to farmers and to facilitate the approval of vaccines, recognising vaccination as critical to the sector’s survival.

Imports and exports

While poultry imports have risen from 2023 to 2024, imports of bone-in cuts have decreased. The increase in imports is largely attributed to tariff-free mechanically deboned meat (MDM) and offal, with Argentina’s entry into the market further driving down prices for local producers.

With widespread HPAI outbreaks in Europe, imports from countries like the UK and Hungary have slowed, but tariff-free imports from unaffected countries remain a concern for local producers’ pricing and production strategies.

On the export front, Sapa reports progress with residue monitoring programmes submitted for UK and Saudi Arabian market access. Inspections by these countries are expected in the coming months, which could open up markets for cooked chicken products, though exports of uncooked chicken remain unlikely at this stage.

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Feed prices and financial pressures

The price of feed, especially maize and soybeans, remains a key concern for the poultry industry. While the reduction in feed costs and less frequent load-shedding in 2024 helped improve efficiency, producers are still under strain from rising energy costs and deteriorating infrastructure.

Despite a slight increase in broiler chicken prices, many producers remain cautious about expanding production due to the ongoing risk of avian influenza and a lack of compensation for culled birds.

Call for VAT-free chicken

In response to growing financial pressure on South African consumers, Sapa, in collaboration with the importers association AMIE, has called for VAT exemptions on frozen chicken cuts and offal. Such a measure would alleviate some of the cost burdens on low-income households and support local poultry producers.

The poultry industry’s future remains uncertain as it navigates these multiple challenges, with the threat of disease, financial strain, and global trade dynamics weighing heavily on local producers.