While you may be envious of those still able to move outside their front door during lockdown, the unprecedented situation has also created challenges for those who must continue to work in essential services.
Valley View Poultry is a second-generation chicken egg business located outside KwaDukuza, KwaZulu-Natal. Roland Schruer’s family has been farming on the property for almost a century.
Valley View Poultry eggs ready to be sent for distribution after being packaged on the farm. PHOTO: Nicky Schruer
The Schruer’s business supplies Highveld Cooperative, a company which sells eggs to major retailers such as Spar, Pick n Pay and Checkers. As they supply an essential service, supplying eggs to South Africans, the Schruer’s have continued production.
The farm has implemented several measures to combat Covid-19 such as informing their employees about the nature of the virus through videos and infographics as well as ensuring all health and hygiene measures are adhered to. Besides ensuring that the virus has as little chance as possible of spreading on the farm, the Schruers have had to obtain the necessary government permits for themselves and their staff so that they can continue to work.
The nationwide lockdown has impacted the farm in several ways. A reliable access to chicken feed has been disrupted and a restriction on deliveries has also affected their business.
A video that Roland received via WhatsApp and passed on to his employees that provided information regarding Covid-19 in Zulu, the home language of many of his staff. VIDEO: iThemba Projects
Moratorium on price hikes creating cost squeeze
Another way in which the Schruer’s have been affected is via the national moratorium on price hikes on goods.
Due to the clampdown on price hikes, an increase in the cost of feed due to the drop in the Rand/ Dollar exchange rate (according to one egg farmer), and previous negative market factors in the egg industry, farmers are having a tough time.
“Limited market access created panic buying, with government policy to limit price gouging. So we’re not able to increase price with demand and come off a low-price base because of a slow economy and recession,” said Schruer. “A surplus of eggs before the virus meant that prices were below cost. Now high demand should normally increase the price, but because of regulation it’s not allowed to increase by law,” explained Schruer.
In a Government Gazette, published 19 March, it states that, under the Consumer Protection Act of 2008, section 120 (1)(d), that a price increase in a particular good may not occur if it “is not equivalent to the increase in cost of providing that good…”. Alternatively, as trade, industry and competition minister, Ebrahim Patel also stated, the increase in profit levels are made higher than before 1 March 2020.
Therefore, due to low prices before the moratorium, the Consumer Protection Act making a price increase difficult, and increases in feed and pandemic related costs, egg farmers are left in an unfavourable situation in which they may have to attempt to justify a price increase.
An industry issue
Another South African egg farmer, who did not want his name published for personal reasons, also stated that his cost of chicken feed is increasing, and that it is normally an egg farmer’s greatest cost.
“The facts are there. You can look at raw material historical prices, you can look at SAFEX future prices. Hens have basic nutritional requirements. If you plug these and the raw material prices into a formulation you get a number. It’s mathematical, you can’t argue with the result,” said the egg farmer.
The farmer asserted that, due to these factors, egg farmers would have to increase prices; which, according to the Consumer Protection Act, could be possible if they can prove their costs have increased to a level that justifies an increase in price.
Mogala Mamabolo, GM for the Egg Organisation within the South African Poultry Association, said with regards to the moratorium on price increases that he believes that “[the government is] trying to prevent possible abuse”.
The focus of the prevention of price hikes is at a retail level, Mamabolo said, stating that this was his understanding. He said that if price increases could be justified, within the legal requirements, then they could possibly take place.
Though the country’s farmers have had to deal with a host of similar national disaster-related problems, the Schruers – like many others – carry on, so you can have your eggs, sunny side up.