South African poultry producer Astral has to cut jobs, it said on Wednesday, under pressure from high feed prices due to drought and from an over-supplied domestic market.

Maize prices in South Africa have hit record highs as an El Nino triggers the largest rainfall shortages in over a century, while cheap chicken imports flood in with the ending of punitive duties on U.S. chicken imports in 2015.

The company employs about 13,000 people across operations in South Africa, Zambia, Mozambique and Swaziland, with a combined processing capacity of nearly 5 million broiler chickens a week.

Astral said it had implemented an import strategy to hedge against maize shortages and high prices, but if conditions did not improve it would have to consider further cuts to production and jobs.

Analysts said production cuts were likely to be accompanied by mergers and acquisitions as companies across the food sector scramble to offset falling revenues.

“A lot of producers are suffering under current conditions and a lot them will be forced to become very, very competitive,” said Global Trader equities analyst Paul Chakaduka.

Shares in Astral slipped more than 4 percent on Wednesday after the firm delivered its operational update.
It said the impact of rising feed costs, record poultry imports and a weak consumer market was more severe than it had originally anticipated.

“The impact of the planned production cutbacks will unfortunately negatively impact on the labour force due to the reduction in hours to be worked,” Astral said.

The South African Government expects the 2016 maize harvest to come in 28 percent lower at 7.16 million tonnes, with an improved harvest only in 2017 with a return of more rainfall.

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4 COMMENTS

  1. Its only in Zambia were bumper haverst is expected the whole region why coz ECl and the nation turned to God when matters were needed most any mason abscored that day of prayers

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    • That is a simple mind at its best of failing to think. What prayers are you referring to when the led person is busy taking away the most sacred human right, which is life, with a happy face.

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    • This is time for an intelligent brain like HH to make money for Zambia through maize exports. With the vast water bodies we have and cattle loans for farming Zambia can triple its maize production for the supply to the region. Vote HH

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  2. Brother, God said in his word that if we humble ourselves in prayer he will heal our land.Our smart minds will amount to nothing if God’s favor is not there.Read your bible in humility, you will soon understand that your academic intellectual is useless without your creator,friend?

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