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Cracks in SA's egg market

| Supplier news

Big food retailers say that, for now, they are finding sufficient eggs to meet demand in spite of the bird flu outbreaks — but it’s producers who are at the sharp end, as there is no insurance against the virus

The chronic egg shortage shows no sign of easing any time soon, with 23 egg farms affected by the bird flu taking a potential 3.7m eggs a day out of circulation. And there’s a sense things are likely to get worse before they get better.

This shortage not only poses a risk for food-price inflation because of rising costs, but jobs have been lost. Though some big retailers appear fairly stoic at this point, retail shortages on the shelves look as if they’re looming and in some instances in the Western Cape notices of reduced stock levels are already popping up.

Since the outbreak of the bird flu in June this year, the virus has been widespread, with many of the cases being in the Western Cape, says the SA Poultry Association.

Almost 3m birds have been culled or are in the process of being culled — again, mainly in the Western Cape.

The SA Poultry Association told Eyewitness News that commercial egg production had dropped to 17m a day from 20.4m after the H5N8 virus was picked up in June.

Egg suppliers have indicated that warmer weather will help in checking the virus.

The Shoprite Group says Shoprite and Checkers stores are getting enough eggs to service demand. But they will, for the rest of the month, not be able to place eggs on promotion to keep demand levels stable. This is no small feat — for the financial year ending July 2017, the Shoprite Group sold more than 916m eggs.

Mike Prentice of Spar says the group is still managing to source stocks of eggs but is not sure how long this will last. "There is most definitely a shortage looming," he says. The recent outbreaks of avian flu have had an effect on one of the group’s two major suppliers "and to compound the problem our other major supplier suffered extensive storm damage".

Prentice says Spar is looking to import liquid eggs, but this is a complex process with a host of requirements. "Using liquid eggs in the production process of the many bakery products will free up the diminishing supply of shelled eggs for direct human consumption."

Eggs are seen as an affordable protein source and demand continues to grow ahead of that for other more expensive proteins, says Prentice.

Pick n Pay’s stores are fully stocked with eggs, and the company says it is in close contact with suppliers.

The general shortage in the Western Cape has affected Massmart, which has been trying to procure eggs from other provinces.

Julian Novak of Woolworths Food says for the moment there is full availability. "As it is difficult to predict the future and as a retailer of poultry products, we are carefully monitoring the avian flu situation."

But it’s the producers who are at the coal face of the crisis. Pier Passerini, MD of Windmeul Eggs in Paarl, says 70% of the laying flock in the Western Cape has been culled. Nine producers in the Western Cape have been affected and 2.3m hens are out of circulation. (A hen lays about 330 eggs in her laying cycle.)

Passerini says all retailers in the Western Cape have been affected. Prices have already risen 15% and will increase further as supply dries up. "Currently there are no short-term solutions. Companies will have to increase biosecurity measures, which come at a great cost, and will also have to build the risk of the disease into pricing, due to the mere fact that there is no compensation or insurance against the virus."

In the long term, he says, it seems vaccination will be the only way for the industry to operate. "Research and history have shown that stamping out the virus is very difficult and as Europe has shown, not possible once it has become endemic to a region."

Dr Charlotte Nkuna, interim CEO at the SA Poultry Association, says 23 egg farms have been affected by bird flu.

So are some shops in the Western Cape importing eggs from other provinces? "SA is one country and dealt with as such. Eggs can move from any unaffected and clean farm to anywhere else in the country without restrictions," says Nkuna.

The Western Cape government estimates the immediate industry losses to be R800m but the long-term financial effect is likely to be about R4bn, according to The South African.

The egg shortage sits alongside the butter shortage. Relief of any kind is hard to see for producers as there’s no insurance for a disease like this. And consumers should start finding alternatives to their daily eggs on toast.

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