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Deflation puts a dent in Pioneer Foods’ turnover

| Social Responsibility

But the company says sales volumes picked up, and costs were low, which bodes well for first-half profit. Deflation in soft commodities weighed on Pioneer Foods’ sales in the December quarter.

Turnover in the three months to December shrank at least 2.4% as prices in some maize and wheat product categories declined. But total volumes rose 5.2%, the company said in a trading update on Friday.

The price deflation followed low grain prices, as a result of a bumper harvest in 2017. SA harvested a record 16.7-million tons of maize over the period.

Pioneer Foods competes with Tiger Brands and AVI for space on supermarket shelves.

Revenue from the group’s international business grew 19.5%, the company said in Friday’s statement. Excluding the Nigerian business, revenue grew 12%.

Despite falling turnover, the groups said improved sales volumes and lower input costs, particularly for maize, would support first-half profits, compared with a year ago.

The company said it had put in place contingency measures to soften the blow of the drought in the Western Cape, where it has "considerable" operations.

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