Small businesses in Khayelitsha have been paying over R3 more for eggs since November . (Photo by Jamie McDonald/Getty Images)
It is a Friday, a usually busy day for local eatery Kwa-Ndaba Chips and Chicken in Khayelitsha, Cape Town, but erratic price changes are keeping customers away.
“Load shedding is killing us,” according to the owner, who asked not be named.
“We buy fresh chickens every day. Yesterday’s price is different than today’s price,” he told the Mail & Guardian. Price increases can vary between R1 and R3 daily, he added.
When customers cannot afford his ready-made food, they only buy bread and milk — the profit margins for which are slim.
The eatery has also stopped selling pizza because of the rolling blackouts, as the electric oven has been rendered unreliable, and gas is costing the owner an additional R1 800 a week.
About 4km from Kwa-Ndaba eatery is the Ikwezi Meats butchery, in Ilitha Park. According to the owners, they had recorded an increase of R4 in chicken and egg prices since the start of January 2023, and adjusting product prices accordingly has had a negative impact on sales.
Adri Williams, managing director of the Khayelitsha Cookie Company, said she had recorded a 4% increase in recipe costs since November, the result of higher egg prices.
Over the same period, the baking company saw egg prices from its supplier increase by R2.52.
Considering that eggs make up a large percentage of ingredients used to bake cookies, Williams said the price increases had a major impact on the business. Khayelitsha Cookies employs previously unemployed women from Khayelitsha and surrounding areas.
While businesses and customers can feel the pressure of increased prices, poultry producers continue to record losses because of load-shedding, as input costs exceed selling price.
Abongile Balarane, general manager at the South African Poultry Association Egg Organisation, told the Mail & Guardian that the country’s chicken flock had normalised, after losing about 10% due to the global bird flu outbreak last year, but other factors were straining the market.
“I can confirm that about 2.8 million birds were culled between April 2021 and September 2022 due to [bird flu],” said Balarane, adding that of an estimated 27 million flock size, “almost 10% was out of production which has resulted in a strain on the supply side. Hence the slight increase in the prices.”
While the chicken flock has been rebuilt, said Balarane, “factors such as the cost of fuel, electricity, and feed are still high. The recently announced 18.36% tariff hike for Eskom will add more pressure on the farmers.”
Marthinus Stander, the managing director at one of the largest poultry producers in the country, Rainbow, described ongoing load-shedding as a crisis that is “beyond sad” and which required a “tough balancing act”.
Stander told M&G that Rainbow could not recover all the costs it had lost last year as a result of consumer prices, load-shedding and rising commodity prices.
While it is too early to give specific numbers, Stander estimates Rainbow’s losses to have reached close to R100 million.
Astral Foods Limited recently announced that its poultry division’s first quarter — ending 30 September 2023 —- was expected to “incur significant losses”.
In a statement, the major poultry producer attributed its losses to high feed input costs and load-shedding. According to Astral, the cost to produce chicken exceeds the selling price by an estimated R2 a kilogram.
Astral could not implement a selling price increase and, consequently, its losses experienced in the previous quarter had not been recovered.
“As a result, Astral continues to ‘subsidise’ the increased cost of production to our customer base and the consumer.”
Astral said it “experienced severe operational disruptions through [the first quarter of 2023] due to Eskom load shedding” and it had led to additional costs and substantial production cutbacks of nearly R12 million.
State-owned utility Eskom is seeking to recover its energy availability factor from the current estimate of 58% to 70% by the end of March 2025. This will see it adding an estimated 6 000 megawatts to the grid over a period of two years. In the meantime, South Africa will continue to experience rolling blackouts.
Without downplaying the 18.36% electricity tariff surge, Stander said it would at least mean there would be electricity and they could focus on how to cover increased tariffs. But now, as with all South Africans, the main aim is to mitigate the impact of load shedding.
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