Rainbow Chicken is monitoring ongoing geopolitical tensions in the Middle East and the price pressures they will create for maize and crude oil, especially if the US/Israel war on Iran lasts an extended period.
CEO Marthinus Stander told Business Times this week that poultry producers will be watching price fluctuations in Chicago maize futures on the Chicago Board of Trade, which are sensitive to rising oil prices.
“What we do, as probably most producers do, is hedge and buy a bigger volume of maize to ensure we have cover,” Stander said. “Maize prices add significantly to the cost of producing chicken. We have seen the Chicago maize price move up and down again, so there is volatility. Brent crude has done the same.”
Stander was speaking after Rainbow Chicken announced its interim financial results and cash dividend declaration for the six months ended December 2025. The company announced that its headline earnings doubled to R669.6m and that it grew revenue by 11.3% to R8.8bn.
The Brent crude oil price peaked at about $116 last Friday as tensions rose in the Middle East, causing the Strait of Hormuz to be shut down, placing pressure on the oil price. Economists expect this to present inflationary pressures that will fuel food prices globally.
I think we at Rainbow will be okay if the war lasts as short as three or four months. But when was the last time that we saw a short war? We will control what we control
— Marthinus Stander, Rainbow Chicken CEO
Stander said that if the war ends soon, poultry producers in South Africa should be fine, but if it continues for a protracted period it will add more uncertainty to oil and maize prices.
“I think we at Rainbow will be okay if the war lasts for as little as three or four months. But when was the last time that we saw a short war? We will control what we can control.”
He said Rainbow Chicken was able to position itself to declare an interim dividend per share of 15c by focusing on its key performance indicators and by making progress in diversifying its sales mix, customer mix, channel mix and product mix.
“I think what’s behind it is … from 2021 we focused on what I call the engine rooms, the operations, feed, aggregation and sales, and we integrated them and decentralised management structures so that each business unit … had an integrated team of those disciplines managing the bottom line. It was sort of a one-team, one-dream approach.”
While the poultry sector saw increased demand for chicken as a result of the latest foot-and-mouth outbreak and related cost implications pushing consumers away from red meat, Stander said the industry was still calling on the government to develop a practical and cost-effective vaccination protocol for avian influenza.
“We were asking for a practical and affordable vaccination protocol to be rolled out, not for all chickens, but for the grandparents, parents and broilers in the value chain. So far, that protocol and the cost of surveillance are not affordable or practical because you will not have wide participation.”
The interim results said earnings before interest, tax, depreciation and amortisation include a fair value loss of R1.6m related to the group’s commodity derivative positions compared to a December 2024 gain of R47.1m.
“The movement relative to the previous period is a consequence of the impact of the strengthening of the rand versus the dollar, together with the softer maize and soybean meal market prices on the group’s procured positions.”
Stander said Rainbow still hoped the government would do away with a provision linked to the African Growth and Opportunity Act (Agoa) that provides for 72,000t of poultry to enter the local market, now that the Trump administration has presented uncertainty around the trade agreement’s extension and South Africa’s continued participation in it.
Repeated proposals for a more practical and affordable set of rules have been rejected. Because of this impasse, only one poultry producer has applied for permission to vaccinate under the existing rules
— Izaak Breitenbach, South African Poultry Association GM
“We have lived with the 72,000t. So that in itself isn’t the biggest concern. The concern is that it should not be there anymore because we did it as an industry when we were asked by [former trade] minister [Rob] Davies because the Americans wanted to sweeten the deal and get benefits from the extension of Agoa.”
Mpho Maja, director for animal health at the department of agriculture, said in an avian influenza update report in October that the first-ever HPAI H7 virus was detected in chickens in South Africa on samples collected at the beginning of June 2023.
“A total of 116 outbreaks were reported; 73 of these outbreaks were located in Gauteng, 11 in Mpumalanga, four in the Free State Province, six in Limpopo, 16 in North West, one in KwaZulu-Natal, one in the Eastern Cape, and three in the Western Cape,” she said.
Maja said all the H7N6 outbreaks were resolved, and the outbreak event was closed on September 1 2025.
Meanwhile, Izaak Breitenbach, GM of the South African Poultry Association, said that while the department of agriculture has insisted on vaccination protocols, the industry has said these are too onerous and costly to implement.
“Repeated proposals for a more practical and affordable set of rules have been rejected. Because of this impasse, only one poultry producer has applied for permission to vaccinate under the existing rules,” he said.
Breitenbach said approval was given for one site, where vaccination proceeded, and applications for other sites are pending.
Business Times
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