Friday is usually a busy day for the Kwa-Ndaba Chips and Chicken restaurant in Khayelitsha, Cape Town, but erratic price changes keep customers away.
“Lod shedding is killing us,” according to the owner, who asked not to be named.
“We buy fresh chicken every day. Yesterday’s price is different from today’s price,” he said Mail & Guardians. The price increase can vary between R1 and R3 per day, he added.
If customers can’t buy ready-made food, they buy only bread and milk – a slim profit margin.
The eatery has also stopped selling pizza because of rolling blackouts, as the electric oven has become unreliable, and gas costs the owner R1 800 extra a week.
About 4km from Kwa-Ndaba restaurant is Ikwezi butcher shop, in Ilitha Park. According to the owners, they have recorded an increase of R4 in the price of chicken and eggs since the beginning of January 2023, and adjusting the price of the product has a negative impact on sales.
Adri Williams, managing director of Khayelitsha Cookie Company, said he has recorded a 4% increase in the cost of recipes since November, the result of higher egg prices.
At the same time, the baking company saw the price of eggs from suppliers increase by R2.52.
Considering that eggs make up a large percentage of the ingredients used to bake cookies, Williams said the price increase has 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 price increases, poultry producers continue to record losses due to reduced burdens, as input costs exceed selling prices.
Abongile Balarane, general manager of the South African Poultry Association Egg Organisation, told the Mail & Guardians that the country’s chicken flock is back to normal, after losing about 10% due to the global bird flu outbreak last year, but other factors are affecting the market.
“I can confirm that around 2.8 million birds were killed between April 2021 and September 2022 because [bird flu], “said Balarane, adding that about 27 million of the size of the gathering, “almost 10% are out of production causing tension on the supply side. So the price has gone up a little bit.”
When raising chickens, Balarane said, “the cost factor of fuel, electricity, and feed is still high. The recently announced 18.36% tariff increase for Eskom will increase the pressure on farmers.
Marthinus Stander, managing director at one of the country’s largest poultry producers, Rainbow, described the ongoing burden disclosure as a crisis that was “beyond sad” and required a “difficult balancing act”.
Stander said M&G that Rainbow can not recover all the costs that have been lost last year as a result of consumer prices, open-release and rising commodity prices.
While it is too early to give specific numbers, Stander estimates Rainbow’s losses have reached close to R100 million.
Astral Foods Limited recently announced that its poultry division’s first quarter — ending September 30, 2023 — is expected to make a “significant loss”.
In a statement, major poultry producers attributed the losses to high feed input costs and reduced burdens. According to Astral, the cost of producing chicken exceeds the selling price by about R2 per kilogram.
Astral has not been able to implement the increase in selling prices and, as a result, the losses experienced in the previous quarter have not been recovered.
“As a result, Astral continues to ‘subsidize’ increased production costs to its customer and consumer base.”
Astral said it was “experiencing severe operational disruption [the first quarter of 2023] due to Eskom’s load shedding” and resulting in additional costs and significant production cuts of almost R12 million.
State-owned utility Eskom is seeking to recover its energy availability factor from its current estimate of 58% to 70% by the end of March 2025. This will add approximately 6 000 megawatts to the grid over two years. In the meantime, South Africa will continue to experience blackouts.
Without reducing the 18.36% increase in electricity rates, Stander said at least there will be electricity and they can focus on how to cover the increased rates. But now, like all South Africans, the main goal is to minimize the impact of load shedding.
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