Households and fast food lovers will soon find themselves paying more for chicken as loadshedding continues to disrupt production and supply of chicken at popular fast food eateries across the country.
While KFC has announced temporary closure of 70 of its outlets due to limited chicken supply and Nandos, Wimpy and Steers finding other means to cope, producers of chicken and agricultural experts are now warning that the price of this popular protein will rise in 2023 if the load-shedding problem does not go away.
Astral Foods, one of the biggest suppliers of chicken to these franchises, including supermarkets, said the situation was putting immense pressure on the availability of chicken.
Chris Schutte, Astral Foods CEO, said the loadshedding problem was affecting poultry producers in the country and that KFC was the worst hit because it had about 1,000 outlets countrywide.
He said in the production of chicken, farmers had specific amount of feed to give to chicks in order to achieve a certain amount of weight and portions as specified by abattoirs and restaurants. On average, the chicken spends 33 days at the farm before it reaches the restaurants.
“If you have to slaughter your chicken at 33 days, you should not miss your date of slaughtering because it will cost you money. You calculate the cost of the feed for the 33 days, when that time has lapsed, as a farmer it is costing you more because you have to continue feeding the chicken.”
In the financial year ended September 30 2022, Astral reported that the direct cost of loadshedding was R126m and water supply interruptions R9m.
“When loadshedding happens, we cannot slaughter the chickens at the abattoir, so the chicken remains for more days at the farm. The chicken then gains more weight because it is getting fed. That causes problems for us. KFC wants their chicken at a specific weight because of their oven sizes If you give them a bigger size of chicken, it will not be ready [cooked] on time because it is big. Processes at restaurants are timed.”
He said even abattoirs only slaughtered a specific chicken size.
“The entire supply chain is disrupted ,” Schutte said.
SA experienced more than 200 days of power cuts in 2022 and has continued with loadhedding in the very first week of the new year.
He added that general decay of municipal infrastructure, unfavourable market conditions had added more pressure.
He said producers had incurred additional costs such as installing diesel generators to keep production continuing.
“As a consequence, chicken becomes more expensive to produce in SA, placing the industry further on the backfoot under already trying times where we see record high input costs for both feed and energy sources. Unfortunately, a direct consequence is that chicken as a preferred protein source has seen prices increase beyond general inflation,” he said.
Dr Jonny van der Merwe, MD of Agri Market Trends, said the disruption would also hit the smaller producers. He said it was difficult to estimate what the actual price increase on chicken would be in 2023.
“It will depend on the extent of the losses locally, how much the imports cost and how demand will react. As soon as price increases there are people who will not afford to buy chicken anymore and will move away from it, which will then decrease demand.”
According to the Household Food Index, which is prepared by the Pietermaritzburg Economic Justice & Dignity Group, the price of frozen chicken portions weighing 10kg has increased from R357,78 in December 2021 to R394,97 in December 2022, which is about 10% increase.
From November 2022 to December, the chicken price surged 4%, while chicken feet increased 15% and chicken livers 7% on year-on-year.
Geoff Whyte, CEO of Africa, Middle East and Asia for Nando’s, said the shortage in supply had made it harder for restaurants to plan and run their facilities properly.
“We have a dedicated supply team working around the clock all through the holiday season to make sure that all our restaurants have supply…When there is shortage you cannot say I will go to another supplier because all the suppliers are facing the same issue.,” he said.
A manager at the KFC outlet in Joburg said said the shortages began on December 26 with the franchise running out of chicken every three days and forced to serve their customer burgers and wraps.
“What was important for us was to communicate to our customers that there is no chicken. Our customers were understanding. We referred them to other KFC outlets which had chicken…It was really a bad feeling turning away customers. We also missed our daily targets which is not good for business.,” he said.
Rosina Maponya, a customer, was relieved to finally get her chicken meal after having visited the outlet daily since Tuesday with no luck.
“I was not happy . I don’t like wings. When I come here I want chicken and nothing else,” Maponya said.
dlaminip@sowetan.co.za
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