LETTER: Flawed analysis does Astral a disservice
The main factor driving prices is rapidly rising input costs, particularly maize and soya
In his flawed analysis of Astral Foods’ interim results, Association of Meat Importers & Exporters (AMIE) CEO Paul Matthew did a disservice to Astral and to the SA poultry industry ("Good for Astral, but not for consumers”, May 17).
He wrongly claims that when Astral has reported increased revenues and profits it has done so because it has raised chicken prices at the expense of the consumer. In its results statement and presentation, Astral explained clearly how it achieved those results — it expanded its business and sold more chickens. It also contained operating costs, improved economies of scale and partially — only partially — recovered steeply rising input costs through higher selling prices.
Further, Astral as a listed public company, has provided transparent detail on its operating margins. Broiler margins improved from a paltry -0.2% to 4.7% on the comparable reporting periods. Does this result speak to a business making profits at the expense of a consumer?
Under the Poultry Master Plan Astral has invested almost R1bn in expanding its poultry-processing capacity and created a further 350 jobs. Why does AMIE not share its members’ net operating margins with the sector? Let’s see their returns on investment.
Matthew says chicken prices increased 17% from January 2021 to January 2022, and he puts the blame on tariff increases in terms of the master plan (of which he is a signatory). Both statements are wrong.
The SA Poultry Association reports monthly on the average prices received by poultry producers. In January the average monthly broiler producer price was R27.99/kg, an increase of 13.8% over January 2021.
If import tariffs played a part in that increase it was a small one. The main factor was rapidly rising input costs, particularly maize and soya, which make up 70% of poultry input costs. This was, and remains, a global phenomenon — food prices are rising all over the world.
For many years now the SA poultry industry has kept price increases to a minimum, providing SA consumers with affordable chicken, which is the main source of meat protein in the country, particularly for lower income consumers.
While we will contain prices, the industry did not undertake during negotiations on the poultry master plan never to raise chicken prices. No industry could do that.
Izaak Breitenbach, SA Poultry Association
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