18/09/2017 07:36 SAST | Updated 18/09/2017 07:36 SAST

Bird Flu Increases Meat Inflation

And it will have a knock-on affect on all food products.

James Akena / Reuters

The recent outbreak of avian influenza, which has seen thousands of chickens killed around the country as a preventative measure, could have an impact on food inflation, IOL reports.

Agbiz head of agribusiness research Wandile Sihlobo told Business Report that the outbreak was "concerning on the food inflation side".

He said bird flu could partially be the key driver of the increase in meat inflation because of its higher weighting within the food inflation basket.

"Chicken accounts for a 14 percent share of the overall food basket. Beef accounts for an 8 percent share. Pork and lamb combined account for a 5 percent share. Overall, this shows the significance of poultry within the food basket," said Sihlobo. The concerns come after bird flu was confirmed at a chicken farm in Uitenhage outside Port Elizabeth.

The H5N8 bird flu strain emerged in the country in June and has already been identified in Gauteng, Mpumalanga, North West, KwaZulu-Natal, and most recently in the Eastern Cape.

Sihlobo said food inflation decelerated to 6.8 percent year on year in July, compared with 6.9 percent in the previous month. He said most food products had decelerated with the exception of meat that was proving "stickier than expected", recording 14.4 percent on a yearly basis in July. This was the highest since December 2011, according to Sihlobo, who said: "This is on the back of an outbreak of avian influenza and cattle restocking process after the 2015/16 drought." He added that there was still no "material impact on the commodities prices" as a result of the outbreak, "but it's something that we will be watching closely over the coming months to see if it's managed properly".

Sovereign Foods, the country's fourth-largest poultry producer, announced on Thursday that it had culled approximately 5,000 chickens in Uitenhage, representing nearly 1 percent of total production at the farm. The JSE-listed company, which is valued at R895 million, said the Hartbeespoort operations, however, remained unaffected. It said management was taking appropriate steps to prevent the outbreak from spreading to other farms. Dr Lubabalo Mrwebi, veterinary services chief director at the Eastern Cape Rural Development and Agrarian Reform, said farms within the 30km radius from the main source would be quarantined and be under "strict veterinary surveillance to minimise" possible spread to other farms.

"The department calls on poultry farms to immediately contact local state veterinary services if they notice high mortality of their chickens."