Rainbow Chicken aims for low-cost operations post-listing

Marthinus Stander, CEO of Rainbow Chicken, speaks to Reuters about the listing of the poultry business on the Johannesburg Stock Exchange (JSE) in Johannesburg, South Africa July 1, 2024 REUTERS/Lelethu Madikane

Rainbow, one of South Africa's leading poultry firms, was spun off by parent company RCL Foods and listed on the Johannesburg Stock Exchange last Wednesday.

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Its shares were trading at R4.50 by 1413 GMT on Monday, up from last week's IPO price of R2.85.

"We’re bringing volumes back and we have invested in feed milling, all to keep costs as low as possible,” Stander told Reuters in an interview.

Poultry industry challenges

South Africa's poultry industry has battled erratic electricity supplies over the past few years, blamed on frequent breakdowns at the country's ageing coal-fired power plants, which disrupt operations and drive costs up. The industry was also hit by the country's worst-ever bird flu outbreak last year.

“You've got to find ways to survive, no matter what the environment throws at you, ours is to produce chicken and stay relevant to the consumer by keeping our prices low,” Stander added.

He said Rainbow had obtained approval to use vaccines against avian flu, "but the rules and protocols to be able to vaccinate are not affordable or practical".

Collaboration for biosecurity

The company is working with the South African Poultry Association and the country's authorities to address biosecurity standards and monitoring protocols, which the industry considers stringent and costly.

Sam Mokorosi, head of origination deals at the Johannesburg Stock Exchange, said spinning off Rainbow would allow the company to focus on its niche and to be "more nimble" to respond to market turns and opportunities.

“The market has been facing some challenges but the fundamental underpinning to the industry is that chicken is still the cheapest form of protein in a growing population," Mokorosi said.