South African egg prices seen rising 20 percent after avian flu outbreak

JOHANNESBURG (Reuters) – Egg prices in South Africa are expected to increase by as much as 20 percent after an outbreak of the highly pathogenic avian flu in June forced farmers to cull egg laying birds, industry experts said on Thursday.

The outbreak of avian flu prompted farmers to cull millions of birds and neighboring countries including Zimbabwe, Namibia and Botswana to ban poultry imports from South Africa.

Industry experts said in October commercial egg production had tumbled 17 percent and over 1,000 workers lost their jobs in the wake of the outbreak of avian flu.

Prices are expected to increase between 15 and 20 percent from December to June 2018, said Senior Agricultural Economist at FNB Business, Paul Makube.

“The increase in egg prices is subject to demand and supply dynamics with the Influenza outbreak having a major influence on the recent spike,” said Makube.

The laying flock of 20.8 million hens had decreased 14.6 percent in October compared with the same period last year, while egg production during October 2017 decreased by 15.7 percent compared to October 2016, data from the South African Poultry Association showed.

Makube said shortages were expected to last up to a year.

However the price increase and the lower maize prices following a bumper 2017 season are expected to help the industry improve profitability after being hit with a severe drought in 2015 that led to job cuts and high feed prices.

“The upside is that the price increase will help producers to recoup losses as they are still servicing debt incurred during the last drought,” said Makube.

South Africa’s maize prices have remained low following the biggest crop on record forecast at 16.744 million tonnes by the Crop Estimates Committee.

Editing by James Macharia and Elaine Hardcastle

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