8 December 2023
Nearly two-thirds of the country’s breeding stock for layer hens are probably affected by highly contagious avian influenza. It could take up to 18 months to rebuild the national layer hen flock to its previous size.
Producers in the broiler chicken industry have imported millions of breeding eggs so there will be enough locally produced chicken meat on store shelves by Christmas. However, the egg industry’s production conditions differ significantly, says Hennie Lourens, CEO of Quantum Foods, the only listed egg producer in the country.
“Eggs will still be scarce in the northern parts of the country next year,” he says. “Outbreaks of the H7N6 strain of highly contagious avian influenza continue here, albeit at a slower pace. In certain areas, so many hens have been culled that there simply aren’t any more chickens that can get sick.”
There are only three companies in the country with breeding stock for layer hens and all have been affected by outbreaks, says Lourens.
Only Quantum is registered with the Department of Agriculture, Land Reform and Rural Development to import breeding eggs for the egg industry. Lourens says it is expensive to import such eggs, partly because they are transported by plane. Furthermore, the egg industry, unlike the broiler chicken industry, can only use the pullets that hatch. This increases the cost of import.
Quantum has imported enough breeding eggs to replace about half of its grandparent stock for Nulaid.
The company, which markets eggs under the Nulaid brand, recorded an operating loss of R36 million in its financial year ending 30 September, compared to an operating profit of R33 million in the previous financial year. The company produces feed, day-old chicks for the egg and broiler chicken industries, point-of-lay hens (hens ready to lay eggs) and live broiler chickens for abattoirs.
The three major factors contributing to its losses are avian influenza, high levels of prolonged load-shedding and high prices for feed raw materials, says Lourens.
Avian influenza takes a toll
The H5N1 strain of avian influenza broke out at Quantum’s Lemoenkloof farm in the Western Cape in April. About 400 000 hens had to be culled.
In August and September, several of its layer and breeding farms in North West and Gauteng were hit by outbreaks of the H7N6 strain.
The value of biological assets (layer hens and breeding stock) that had to be written off in the financial year was R155 million. This excludes the cost of feed and eggs that had to be destroyed on the affected farms, as well as the cost of disposing of the chicken carcasses in the prescribed manner and disinfecting chicken houses.
Quantum also lost potential income because it could sell fewer eggs from the affected farms and could not sell the culled hens on the live chicken market.
Lourens estimates income from the latter could be about a third of the original purchase price per hen. This is why egg producers are hesitant about the government’s guidelines for vaccination, which stipulate that vaccinated chickens may not be sold on the live chicken market.
Vaccination guidelines impractical
Earlier this year, after the disastrous outbreaks of H7N6 in northern parts of the country, the government decided in principle to allow voluntary vaccination against avian influenza.
However, Lourens says the guidelines it wants to prescribe for this are demanding, especially in terms of observation and monitoring. Quantum has not yet decided whether it will be worth vaccinating its breeding stock.
“The fact that the government does not compensate farmers for chickens that die of avian influenza or have to be culled makes it very difficult to combat the disease,” he says. It is uncertain whether all farmers report avian influenza outbreaks because the government does not compensate them.
“The obvious option in South Africa is to allow vaccination, but then the guidelines must be practically feasible.”
Pasteurised eggs are safe
Lourens says earlier this year the government allowed the marketing of eggs from hens affected by avian influenza if they were pasteurised. However, at one point, the government simply banned such egg sales.
“With the H7N6 strain, the hens recover and start laying eggs again. Initially, we could send these eggs for pasteurisation under state supervision with a so-called red-cross permit and then market them. Pasteurised eggs are completely safe.”
Lourens says the sale of pasteurised eggs would have helped alleviate shortages and keep prices lower.
