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Pig farmers ‘prayʼ as Tiger Brands plants shut after people die - Moneyweb 2018/06/22, 13*30

Companies and Deals

Pig farmers ‘pray’ as Tiger Brands


plants shut after people die EDITOR'

The industry has cut 2 000 jobs and pork prices have dropped to four-year lows
following the deadly listeriosis outbreak.
1
Ntando Thukwana and Odwa Mjo, Bloomberg / 4 June 2018 08:46 ! One comment so far 2
3

Picture: Daniel Acker/Bloomberg

The People First Piggery in the gritty South African mining city of Rustenburg used to
slaughter 150 pigs each month. It’s now down to zero.
https://www.moneyweb.co.za/news/companies-and-deals/pig-farmers-pray-as-tiger-brands-plants-shut-after-people-die/ Page 1 of 4
Pig farmers ‘prayʼ as Tiger Brands plants shut after people die - Moneyweb 2018/06/22, 13*30

slaughter 150 pigs each month. It’s now down to zero.

Three months after South Africa linked products from a factory owned by Tiger Brands
Ltd, the country’s biggest food producer, to the world’s deadliest known listeriosis
outbreak, pressure is building on pig farmers. The industry has cut at least 2 000 jobs,
pork prices dropped to four-year lows and small farmers are at risk of closing down,
industry groups say.

Read: Tests confirm deadly listeria strain at Tiger Brands’ plant

The People First cooperative, which buys piglets from larger piggeries and supplies
* MORE
local butcheries, doesn’t have any livestock left after co-owner Petrus Lepota decided
#
8against restocking because he was losing money by selling at current prices. He’s had
to cut staff and is wary of predicting when things might improve.
SHARES
∠ Tiger
$“We can’t speculate,” Lepota said. “Ours is to pray.” Afric
22 Jun
%
Health Minister Aaron Motsoaledi said March 4 that an outbreak of listeriosis that has ∠ Quilt
now killed at least 208 people since the start of 2017 and infected 1 038 was traced to 22 Jun
&
ready-to-eat processed meat products. Tiger Brands closed factories for cleaning and
∠ Stein
has recalled and incinerated more than 4,000 metric tons of products. It said May 24
+ inves
the plants will probably stay shut most of the rest of the year. loans
( 21 Jun
South Africans have been advised to avoid chilled ready-to-eat processed meat
products like sausages and polony — a local cheap and highly processed meat product ∠ Aven
+
that’s popular in lower-income households. appro
21 Jun
)
Read: Listeria hysteria sends pork prices tumbling
∠ Red-
The resultant slump in demand for pork caused a nearly 40% plunge in pork prices. Yet deliv
21 Jun
farmers don’t have the luxury of delaying slaughter because of a risk that quality and
flavour will deteriorate, said Richard Krige, who runs Desert Star Piggeries in the
Western Cape town of Caledon.

“The crisis is forcing pig producers into financial suicide,” said David Osborne, founder
of Number Two Piggeries, one of the country’s larger suppliers. “We are producing pigs
at 2018 costs and selling at below 2014 prices.”

While livestock farming is a tiny part of South Africa’s economy, job losses anywhere
are a blow in a country with 27% unemployment. And eventual meat shortages due to
farmers scaling down could push food costs up even faster, adding to inflationary
pressure.

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Pig farmers ‘prayʼ as Tiger Brands plants shut after people die - Moneyweb 2018/06/22, 13*30

Prices could nearly double in 12 to 18 months if expected shortfalls materialise and


demand has normalised by then, according to projections from the South Africa Meat
Processors Association.

“There is no incentive for producers to raise their level of production,” said Paul
Makube, an agricultural economist at First National Bank Holdings Ltd. “When demand
recovers, especially on the processed meat side, the supply will relatively be down.”

To be sure, some analysts predict that the industry will recover fairly quickly once the
listeriosis threat subsides. The number of cases being reported has already dropped
sharply, according to data reported by the National Institute for Communicable
Diseases.

Once consumers realize that, prices should start to recover, said Wessel Lemmer,
senior agricultural economist for Absa Bank Ltd.

For now, though, many farmers are staying cautious.

Desert Star’s Krige said he canceled an earlier order for more than 200 young female
pigs because he’s worried about overproduction.

“We need to bring the market back into balance,” he said. “We can always grow
production again as we see the process side picking up on demand.”

© 2018 Bloomberg L.P

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