SOUTH AFRICA - After two years of steep price hikes driven by disease outbreaks, the price of chicken in South Africa is beginning to stabilize. 

Chicken, which makes up about two-thirds of the meat consumed in the country, saw substantial price increases over the last two years due to a global supply shortage caused by diseases like avian influenza. 

However, the latest trends suggest a moderation in price growth as supply chains recover.

According to Marlene Louw, a Senior Economist at Absa Agribusiness, the recent outbreaks, particularly of avian influenza, had led to a global shortage, pushing up prices for chicken products. 

Despite the risk of new outbreaks, Louw expects prices to stabilize in the medium term due to factors such as lower feed costs and improved production margins for farmers. This could provide relief to South African consumers who have faced significant food price inflation.

Price trends and forecasts

The price of whole frozen chickens increased by 19% since 2021, rising from R29.22 (US$1.66) per kilogram to R36.20 (US$2.06) per kilogram in 2024. 

The increases for individually quick-frozen (IQF) chicken pieces—a staple for many lower-income households—were even steeper, with prices climbing 23% since 2021. However, Absa’s projections suggest that price growth for IQF products will slow to around 5% over the next two years, reaching R32.82 (US$1.87) per kilogram by 2026.

Similarly, the Bureau for Food and Agricultural Policy (BFAP) noted an 11.9% drop in IQF prices year-on-year as of July 2024, largely due to subdued consumer demand. 

Their data shows the price of IQF chicken fell from R33.47/kg (US$1.90) in July 2023 to R29.50/kg (US$1.68) in July 2024. This decline is seen as a reflection of both recovering production and shifting consumer purchasing patterns.

The overall cost of a healthy food basket for a family of four increased by 4% in the same period, according to BFAP, with the basket price rising by R366 (US$20.82) to R3,761 (US$213.94) in July 2024. Eggs and rice saw especially sharp price increases, with eggs rising by 35% and a 1kg packet of rice by 34%.

Role of imports and global supply chains

South Africa imports approximately 20% of its chicken, mainly frozen bone-in portions from countries like Brazil. Supply interruptions from key exporters have a significant impact on local prices. 

In July, Brazil suspended exports for 21 days after a case of Newcastle disease, underlining the country's critical role in global poultry supply chains. 

With more than 400,000 tons of chicken exported from Brazil monthly, any disruptions to this supply can affect price stability in South Africa.

Brazil’s importance as a supplier was highlighted again by the UN Food and Agriculture Organisation (FAO), which reported that international poultry prices fell in August 2024 due to lingering effects of the Newcastle disease-related export suspension from Brazil. Despite this, poultry prices in South Africa remain highly sensitive to global disruptions.

Calls for policy adjustments

Given the importance of chicken as a protein source for many South African households, there have been increasing calls to add chicken pieces to the list of zero-rated food items to ease the burden on consumers. 

However, Louw cautioned that such changes could have unintended consequences, potentially altering consumption patterns and affecting prices and margins for other meat products.

Instead, Louw emphasized the need for policies that support efficient broiler production, particularly focusing on agile disease management and sound service delivery. By addressing production challenges, policymakers could help maintain price stability without distorting market dynamics.

Outlook for 2024 and beyond

The latest edition of the Absa AgriTrends Report suggests that chicken prices will increase more moderately over the next few years. 

After a surge of 19% in recent years, the price of whole frozen chickens is expected to rise by just 8% by 2026, reaching R39 (US$2.22) per kilogram. Similarly, IQF prices are forecast to grow at a slower rate, providing some relief for low-income consumers.

The report also noted that the strong recovery in global poultry production, especially in key markets like Brazil, combined with a stronger rand, could further help contain price increases. 

While potential disease outbreaks remain a risk, a favorable outlook for feed prices and robust supply growth are expected to moderate future price hikes.

As South Africa continues to recover from the impact of avian influenza and other challenges in the poultry sector, consumers can expect some relief from the intense price pressures of recent years. 

However, continued vigilance in disease management and supportive agricultural policies will be essential to ensuring stable and affordable chicken prices in the long term.