Primary agriculture business Quantum Foods experienced favourable trading conditions across its animal feed, broiler farming and layer and egg farming businesses during the four months ended January 31.

Quantum suffered a R37-million impact owing to outbreaks of highly pathogenic avian influenza (HPAI), as well as reduced volumes owing to loadshedding.

However, the company has since improved its throughput and recovered its layer flock, while benefitting from more reliable electricity supply from Eskom, relatively high egg selling prices and no HPAI outbreaks. Feed costs were also relatively stable in the four months under review.

Quantum reports that the higher volumes resulting from higher layer flock numbers contributed to improved farming efficiencies and cost recovery and, coupled with strong demand from external customers, resulted in increased earnings in the reporting period.

These factors resulted in much improved earnings from the layer farming business, the company confirms.

The company's egg supply was about 70% higher in the four months under review, compared with the same months of the prior year.

The company explains the margin contribution benefit of higher egg volumes, continued high levels of operational efficiency at the egg packing stations, effective cost management and improved overhead cost recovery outweighed the negative effect of a 13% decline in average egg selling prices when comparing the two periods.

Egg prices should decrease by mid-2025 as national egg production recovers following devastating HPAI outbreaks in 2023.

The risk of HPAI remains high and is expected to remain high for the remainder of the 2025 financial year, with an increased number of outbreaks already having been reported in the US, Europe and North Africa.

The stringent protocols for voluntary vaccination against HPAI published by the South African government remain prohibitive, in Quantum’s view, with no producers having been successful in their application to vaccinate poultry.

To mitigate this risk, the company is maintaining the strategy introduced in 2024, which involves placing a reduced number of layers in higher risk geographical areas and sourcing layer hatching eggs from a larger number of geographically diverse breeder farms when compared to the protocol that was in place prior to the 2023 HPAI outbreaks.

BROILER FARMING            

The operational and financial performance of the broiler farming business during the reporting period was satisfactory compared with the prior corresponding period, Quantum says, adding that the genetic performance of the Ross 308 chickens improved at both breeder and broiler level while keeping cost management in mind.

Day-old broiler chick volumes produced at the Hartbeespoort hatchery increased and benefited from full production activities at the Hartbeespoort breeder farm in the months under review, which was not in production during the prior comparable four months, owing to an earlier HPAI outbreak.  

Quantum continues to advance the conversion of a broiler and layer rearing farm in Gauteng to broiler feeder farms. These projects, once completed, will increase hatching egg production volumes in the vicinity of the Hartbeespoort hatchery and therefore reduce the number of hatching eggs required to be transferred to this facility from the Western Cape.

The company explains that this will result in reduced logistics costs and is expected to improve efficiencies, especially hatchability, which is negatively impacted by the current transfer process.

When compared with the prior comparable period, total day-old chick production increased by 6% in the reporting months, while live broiler volumes supplied decreased by about 2% year-on-year owing to a slight reduction in placement volumes and a marginal decline in the average weight of broilers supplied.

FEED BUSINESS

Quantum continued to recover volumes from the Pretoria feed mill in the period under review, where volumes were lower in the prior comparable period owing to HPAI outbreaks.

Total feed volumes supplied in the four months under review increased by about 21% when compared with the prior corresponding period.

The benefit of improved volumes and well executed cost and margin management offset the increased costs incurred in respect of the intake of raw materials at the Malmesbury feed mill.

Quantum says repairs to the Malmesbury feed mill intake area have been completed following an explosion in June last year. The company is now focused on expanding production capacity at the mill, which should be complete by the second quarter of the 2026 financial year.

OTHER OPERATIONS

Quantum says trading conditions in Zambia remained challenging in the reporting period owing to drought conditions, which led to lower grain harvests and higher prices, as well as lower hydroelectric power generation capacity in the country.

The company adds that, while demand for eggs remained strong and the Mega eggs business continued to perform well, the demand for day-old chicks and feed remained muted in Zambia in the period under review.

Trading conditions in Uganda remained favourable with lower feed costs supporting higher demand for day-old chicks and improved margins from the Masindi egg business.

Operations in Mozambique were sporadically impacted by protest action following the Mozambican general election held on October 9 last year.

The financial impact was relatively minor and the egg business continued to perform well, with selling prices supported by lower availability of eggs in the market, satisfactory efficiencies and cost management.

Quantum explains that, on December 26, a crowd stormed the layer farm and looted about 16% of the layer birds. Fortunately, no injuries to staff members were reported and operations were able to resume soon after the incident.

However, the lost egg production resulting from the incident will negatively impact earnings from this business during the 2025 financial year.

Overall, the group's other African operations performed steadily and contributed satisfactorily to the company's financial performance in the 2025 financial year so far.