Chickens at a JSE-listed RCL farm in Pietermaritzburg are at risk of starving as the main N3 highway closure is preventing the food producer and owner of Rainbow Chicken brands from delivering sufficient soya from its mills in Gauteng, while bread production has also been halted by numerous food producers.
The looting and large-scale destruction of property and infrastructure in KwaZulu-Natal and parts of Gauteng, including the ransacking of more than 200 bottle stores, has put food security at risk, with experts warning that hungry consumers could further destabilise the very volatile situation.
Food producers are facing multiple difficulties arising from accessing raw materials for bread or animal feed, and, in some cases, they have stopped producing food as factories in KZN have closed due to the unrest. Deliveries of food to many retailers have also stalled in areas affected by the violence.
RCL corporate affairs executive Stephen Heath said the company, which owns more than 30 consumer brands, was running out of feed for its chicken farm in KwaZulu-Natal.
It was not able to slaughter and package 250,000 chickens per day this week at its Hammansdale factory near Durban due to unrest, and it could be forced to cull the birds if the situation continues, which would lead to profit losses and affect SA’s food supply.
The closure of the N3 highway between KwaZulu-Natal and Gauteng is also delaying deliveries of wheat and yeast from Durban to the main bread producing factories in Gauteng, said Heath.
In KwaZulu-Natal, Tiger Brands, one of the country’s largest food producers, was not baking or distributing Albany bread, a staple for millions of South Africans.
Deliveries of bread in Gauteng were constrained as some retailers were closed, Tiger Brands spokesperson Kanyisa Ndyondya said.
The supply shortages have compounded the plight of food producers already facing weakening profit margins amid sky-high food inflation due to rising demand for commodities in China.
The SA Canegrowers Association said 353,000 tonnes of sugar cane worth R211m had been lost to arson, and millers had been devastated by looting. This has had a knock-on effect on the entire industry, with union Uasa warning of job losses.
The instability, looting and destruction of infrastructure that has been broadcast across the world could further dampen weak investor sentiment in an economy struggling to grow and create jobs after a million were lost due to the coronavirus pandemic.
Meanwhile, the number of shops looted exceeded 800 and more than 100 had been burnt down by Tuesday evening, according to the Consumer Goods Council of SA (CGCSA) that represents retailers. It estimated a minimum cost of R5bn without taking into account lost earnings as stores across the country closed their doors as a safety precaution.
Pick n Pay, Clicks, Massmart, owner of Makro and Game, Mr Price and Cashbuild were among retailers that had shut stores in Gauteng and KwaZulu-Natal, and would only reopen them when it was safe to do so.
Many retailers’ distribution centres, including Massmart-owned Riverhorse’s 52,900m2 centre near Durban, have been looted and torched.
In many parts of Durban, consumers queued for hours to buy food, fuel and medicines.
Building company Cashbuild said on Tuesday that 36 of its stores had been looted and 33 stores were closed as a precautionary measure to prevent further damage.
Mr Price, which owns brand including Sheet Street, said about 7% of the group’s 1,592 stores have been entirely looted. It closed a further 539 stores across its six divisions, mostly in KwaZulu-Natal.
Famous Brands, the owner of Mugg & Bean, Steers and Debonairs, said 99 restaurant and fast-food outlets had been destroyed, mostly in KwaZulu-Natal. Its logistics facility in Westmead in the province had been damaged and is non-operational but could be repaired once access is restored.
The JSE food producers index has risen 2.76% since Monday when the looting started and the retailers index has fallen only 2.42% since Monday.
Investor analyst Syd Vianello said investors probably were expecting retailers to claim insurance for their losses of fixtures, stock and loss of profit.
Investors, he said, would recognise the costs of destruction in retailers’ businesses, when it becomes apparent in company results.
But the ultimate cost of the looting would be job losses, which would reduce consumers’ spending capacity and impact many businesses’ bottom lines.
Update: July 14 2021
This story has been updated throughout.
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