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Maize price hike set to spark pork price increase

| Economic factors

Consumers can expect a rise in pork prices as the cost of maize, pigs' staple diet, has shot up by 70% since February 2015, according to the South African Pork Producers’ Organisation (Sappo).

Increases in pork prices are inevitable, said Sappo CEO Simon Streicher.

“Up to 60% of pig feed is comprised of maize, and because maize farmers have been unable to plant decent crops this season, the price for available yellow maize increased since February 2015 by 70%,” he said. “Many pork producers are in difficulty and are facing financial hardships.”

Farmers are looking to maintain the same level of production as in the past but with limited, and increasingly expensive, resources, said Streicher.

“Producing the same quality and quantity of pork products in these conditions is a challenge and output will decrease,” he said.

“This will obviously have a domino effect on supply and demand and increases in pork prices are unavoidable. There is no alternative, they have to increase.”

The drought, a weakening rand, an unstable electricity supply and increased labour costs are adding pressure on pork producers.

“We are really concerned about what’s happening and we are doing what we can,” he said. “The harsh reality, though, is that everyone will feel the consequences at some point, even consumers.”

Streicher said the picture is especially bleak for emerging farmers. “They either feed their families or look after their farms,” he said. “The choice they make is obvious.”

His warning follows another one from Paul Makube, senior agricultural economist for FNB Business, who told Fin24 on Monday that as meat producers start rebuilding their herds there will be a shortage of supply in the medium to longer term, leading to an increase in prices.

"The economic outlook has deteriorated and unemployment has reached a record high. This means that a further rise in meat prices will be constrained by affordability, as consumers will simply switch to more affordable protein sources such as chicken if red meat becomes too expensive," said Makube.

The biggest challenge for meat producers right now is overcoming financial and cash flow hurdles as they aim to rebuild their herds to normal levels with little or no income coming in, according to Makube.  

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