Egg industry estimates up to 18 months to recover

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JEREMY MAGGS: Alright, let’s move in a different direction now. South Africa’s avian flu outbreak that has led to a shortage of chicken and eggs and the effects of the egg shortage have been immediate as stores are now starting to ration the number of eggs that each customer can buy. Some retailers are exploring different options. These include imports to create a more consistent supply.

More now from Dr Abongile Balarane, who is chairperson of the South African Poultry Association’s [Sapa] Egg Division. So at the start of the week, firstly, can you give us an overview of the current scale of the outbreak here in South Africa, and I’m wondering whether you are more optimistic about containment?

ABONGILE BALARANE: Ja, it appears that the last I’ll say two or three weeks, the peak times for this avian influenza [AI], where we recorded quite a number of cases on a daily basis. As we start this week, in fact it appears that when we look at the forecast, it may start to go down in terms of the cases that are reported. So we are hoping our forecast will be in line with the reality on the ground. I’m worried, in Gauteng, I see there’s a bit of a wind today and this H7, it appears that it also moves with the wind. So we are monitoring the situation.

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JEREMY MAGGS: How severe right now is the shortage of chicken and eggs and which regions are the most affected?

ABONGILE BALARANE: So the H7 was highly dominant or is highly dominant around Gauteng and Mpumalanga areas. It has also spread into some parts of Free State, Limpopo and also North West. The H5N1 strain was also dominant in the Western Cape province and also some parts of KwaZulu-Natal. So those are the areas that are affected by both the strains of this avian influenza. But it appears that most cases were reported around Gauteng and Mpumalanga.

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JEREMY MAGGS: Did this outbreak take the industry by surprise?

ABONGILE BALARANE: It took us by surprise. We are in the third cycle of avian influenza in South Africa since the first case was reported in 2017. Now, usually in the past, the cases or the strain that was known in South Africa was the H5. This year, around June, when we picked up the H7, which we are still learning about, it came differently.

It behaves differently from the H5 strain. It’s highly unpredictable, the H7, even if you apply the highest level of biosecurity measures on farms, it appears that it penetrates the farms. We are still learning about this virus and its behaviour.

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JEREMY MAGGS: So obviously that means a re-look at biosecurity at some point.

ABONGILE BALARANE: We always encourage our members and the farmers to apply high levels of biosecurity. We cannot compromise on biosecurity and with the added advantage that we are still negotiating with government [regarding] the possibility of vaccinating in the near future for both the H5 and the H7 strains.

Read/listen: Farmers urged to increase precautions to prevent avian flu spread

JEREMY MAGGS: In terms of recovery and supply line, what sort of timeframe are we looking at and how long do you anticipate shortages to last?

ABONGILE BALARANE: Ja, if you look at the egg side of things, maybe if you look at the number of layers that we’ve lost, to date we’ve culled more than five million layer birds. Those are the chickens that give us eggs on a daily basis. About five million of those are already culled, and we suspect that there could be additional cases once they’re confirmed, of course, by government and all the processes that need to be adhered to.

We’re estimating another 3.5 million could add to that five million, which will bring the cases at the end of the day close to around 30% of the local egg industry.

So for us to recover that 30%, or let’s say 25% to 30%, that we’ve lost due to the AI situation, it’ll take us almost 17 to 18 months to restock those farms.

JEREMY MAGGS: That is a long time. So I’m assuming that the Egg Division would have concern about the potential of price gouging due to the shortage. Do you have a stance on that?

ABONGILE BALARANE: Our position is that we really do not support price gouging. The unfortunate part, the South African Poultry Association does not fairly participate in terms of issues of prices in the trade because of conditions set by the Competition Commission. But we are looking into such issues of price gouging. It’s not what we encourage.

Read: Chicken and egg prices set to soar ahead of festive season

We understand at this stage there will be at least some strain on the supply side of eggs, and we are only hoping the normal forces of supply and demand will drive the prices of eggs in the market or poultry products in the market.

JEREMY MAGGS: How effective do you believe the current rationing measures are by stores in managing this crisis? Is that an optimum solution?

ABONGILE BALARANE: It is a fairly optimum solution because what we are trying to do also is to look to the festive season ahead of us, we will definitely fast-track the importation of liquid eggs and egg powders for the industrial processes. So that the eggs that were supposed to go for processing, can come back to the retail shelves so that at least we are able to supply the South African population with eggs.

JEREMY MAGGS: Some retailers, Doctor, are considering imports to address the shortage. Do you think this is a solution and would there be potential concerns?

ABONGILE BALARANE: Imports, naturally, for most economies are not good because they also include, it depends, in some cases imports can have some detrimental effects to the local market. But as South Africa, we cannot say we are against the imports of eggs at this stage. If they meet the local standards and also the regulations set by the government, we bank on that if we see imports coming to South Africa, that they will be of good quality, and they’ll match what the South African producers are able to give to the South African consumers.

But at this stage, we haven’t seen any importation of fresh table eggs that are landing into South Africa.

We’ve got inspectors on the ground who are also looking into quality of eggs that are not fit for trade. We are also hoping that our inspectors will work timelessly to ensure that no product of inferior quality will be landing into the South African consumers.

JEREMY MAGGS: Just a final one, given the impact on the supply chain, you spoke about as long as 18 months, inevitably assistance or support is going to have to be extended to poultry farmers, big and small, I imagine.

ABONGILE BALARANE: There will be a high need for support for the producers and if you remember before this avian influenza hit us, already most of the producers were financially struggling because of the prices of fuel, electricity, and also the cost of the feed.

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So this avian influence actually has added more pressure to the producers and we are hoping that as we start to negotiate with government, there will be some opportunities or areas where we could get assistance so that we ease the pressure on the farmers as they will be restocking the capacity that has been lost.

JEREMY MAGGS: Thank you very much for the update. Chairperson of the Egg Division, Dr Abongile Balarane, thank you very much.