It’s a Friday, a usually busy day for local restaurant Kwa-Ndaba Chips and Chicken in Khayelitsha, Cape Town, but erratic price swings keep customers away.
“The loadslide is killing us,” according to the owner, who asked not to be named.
“We buy fresh chickens every day. The price of yesterday is different from the price of today,” he told the mail and guardian. Price increases can range from R1 to R3 a day, she added.
When customers can’t afford their prepared food, they only buy bread and milk, whose profit margins are slim.
The restaurant has also stopped selling pizza due to continuous blackouts, as the electric oven has become unreliable and gas costs the owner an extra R1800 per week.
About 4 km from Kwa-Ndaba restaurant is Ikwezi Meats butcher shop in Ilitha Park. According to the owners, they saw a R4 increase in chicken and egg prices since the beginning of January 2023, and adjusting product prices accordingly had a negative impact on sales.
Adri Williams, CEO of the Khayelitsha Cookie Company, said she had seen a 4% increase in recipe costs since November, as a result of higher egg prices.
During the same period, the bakery company saw its supplier’s egg prices rise by R2.52.
Considering that eggs make up a large percentage of the ingredients used to bake cookies, Williams said the price increases had a big impact on the business. Khayelitsha Cookies employs previously unemployed women from Khayelitsha and surrounding areas.
While businesses and customers may feel the pressure from rising prices, poultry producers continue to make losses due to load reduction as input costs exceed selling price.
Abongile Balarane, general manager of the South African Poultry Association Egg Organization, told the mail and guardian that the country’s chicken flock had returned to normal, after losing around 10% due to the global outbreak of bird flu last year, but other factors were putting pressure on the market.
“I can confirm that around 2.8 million birds were culled between April 2021 and September 2022 due to [bird flu]Balarane said, adding that out of an estimated flock size of 27 million, “almost 10% were out of production, which has resulted in a strain on the supply side. Hence the slight increase in prices.
Although the chicken flock has been rebuilt, Balarane said, “factors like the cost of fuel, electricity and feed are still high. The recently announced 18.36% fee increase for Eskom will add more pressure on farmers.”
Marthinus Stander, managing director of one of the country’s largest poultry producers, Rainbow, described the ongoing load shedding as a crisis that is “beyond sad” and requires a “tough balancing act.”
stander said M&G that Rainbow was unable to recoup all of the costs it had lost last year as a result of consumer prices, reduced loads and rising raw material prices.
While it is too soon to give specific figures, Stander estimates that Rainbow’s losses reached R100 million.
Astral Foods Limited recently announced that the first quarter of its poultry division, which ends on September 30, 2023, was expected to “incur significant losses.”
In a statement, the top poultry producer attributed its losses to high feed costs and shedding of cargo. According to Astral, the cost of producing chicken exceeds the selling price by an estimated R2 per kilogram.
Astral was unable to implement an increase in the sale price and, consequently, the losses experienced in the previous quarter were not recovered.
“As a result, Astral continues to ‘subsidize’ the increased cost of production for our customer base and the consumer.”
Astral said it “experienced severe operational disruptions through [the first quarter of 2023] due to Eskom cargo shedding” and had generated additional costs and substantial production cuts of almost R12 million.
State utility Eskom is trying to recover its power availability factor from the current estimate of 58% to 70% by the end of March 2025. This will see it add approximately 6,000 megawatts to the grid over a two-year period. years. Meanwhile, South Africa will continue to experience rolling blackouts.
Without downplaying the 18.36% electricity rate increase, Stander said it would at least mean there would be power and they could focus on how to cover the rate increase. But now, as with all South Africans, the main objective is to mitigate the impact of load reduction.
South Africa is in an energy crisis. To guide you through the darkness, the M&G has decided to make all Eskom content free to read. Please consider taking out a subscription To help us keep our lights on
