An oversupply of South Africa’s pork market has led to a drop in wholesale pork prices, according to Eskort on Tuesday
Image: Supplied Eskort
An oversupply of South Africa’s pork market has led to a drop in wholesale pork prices, according to Eskort, the producer of bacon, sausages, and pork products.
The pork industry has faced challenges with Africa Swine Fever (ASF) in recent times
Eskort on Tuesday said that South Africa’s pork market has undergone a dramatic reversal in recent months, with fears of shortages giving way to a significant oversupply.
Eskort CEO Arnold Prinsloo said wholesale pork prices have fallen from around R40/kg to approximately R30/kg, after earlier outbreaks of ASF and Foot-and-Mouth Disease (FMD) temporarily disrupted supply and triggered precautionary imports.
Prinsloo added that it's good news for consumers, who are already benefiting from lower pork prices at retail.
“However, for the industry, it's a more nuanced picture. While affordable prices help stimulate demand, a prolonged period of oversupply places pressure on producers' margins,” he said.
“The healthiest outcome is a balanced market where consumers have access to affordable pork while producers remain commercially sustainable. We expect the market to gradually rebalance over the coming months.”
Prinsloo explained that the oversupply is the result of two events coinciding.
“Earlier this year, outbreaks of ASF and FMD raised concerns about potential pork shortages, prompting processors to import pork to secure supply. Those imports typically take eight to ten weeks to arrive. By the time they reached South Africa, local farms had recovered from disease-related restrictions and resumed normal production,” he said.
“This meant imported pork entered the market at the same time as domestic supply recovered, creating a temporary surplus and placing downward pressure on wholesale prices.”
Prinsloo noted that ASF has had no significant impact on large commercial pork producers, including Eskort, due to the strict biosecurity measures implemented across the commercial pork industry.
“While ASF has primarily affected smaller producers, it has not been the key driver of the current decline in pork prices. The more significant factor has been the market impact of FMD restrictions and the subsequent recovery in supply.”
Prinsloo said farms under veterinary restrictions were unable to send pigs for slaughter.
“Following the government's decision on 8 July to reduce the required holding period under Section 9 from 90 days to 42 days, a significant number of market-ready pigs were released into the supply chain.”
Prinsloo concluded that he expected the market to stabilise closer to its historical average of around R32/kg as supply and demand gradually rebalance.
“The lower farm cost prices are already filtering through to retailers, with Eskort products dropping significantly, including pork chops being reduced from R120/kg to approximately R80/kg, boerewors from around R120/kg to approximately R100/kg, and three packs of bacon that previously retailed at around R130 now selling for approximately R100.”
Professor Simphiwe Madikizela, an economist at the University of South Africa (Unisa), said that the lower prices were a positive development given the financial pressure and strain that consumers are under.
“The oversupply of pork is due to the restrictions that are imposed by the countries that South Africa would have exported to; the main reason is weak consumer demand, competition from other proteins, improved production efficiency, seasonal production cycles, and recovery after previous disease disruptions,” he said.
Madikizela added that ASF has been largely contained and managed well.
“However, there are still new outbreaks in other areas of the country, so it’s not completely eradicated and it will be a factor in lower prices for pork due to the restrictions that get imposed on countries that experience the disease. I have to add that the disease does infect humans, but it’s not a human health risk,” he said
Dawie Maree, head of FNB agriculture marketing and information, said that the current oversupply is a result of pre-empted imports (after the earlier outbreaks of diseases) that are now arriving in South Africa, while producers who were under quarantine due to outbreaks are now back in the market.
“So it is a bit of a coincidence that we currently have oversupply, while the market is normally in balance.”
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