As South Africa-based agricultural services company, AFGRI, re-enters the poultry sector through a new venture in Mozambique, its former chicken business is set to be acquired by government-owned fund manager, Public Investment Corporation (PIC).
South Africa’s poultry sector has been beset with difficulties in recent years. Challenges have included prolonged spells of feed ingredient shortages and high prices, and broiler companies have long been fighting fierce competition from imported chicken.
Adding to the industry’s woes, the first cases of highly pathogenic avian influenza in poultry and other birds were detected in June of this year. The number of outbreaks in the country already stands at 92, based on official reports.
AFGRI invests in Mozambique’s poultry industry
Through its subsidiary Philafrica Foods, AFGRI is investing in a poultry business in the north of the Republic of Mozambique, according to Business Live. The new entity will be a 50-50 joint venture with Novos Horizontes, a vertically integrated poultry company that works with smaller producers.
This deal represents the first of Philafrica’s planned ZAR1.5-billion (US$111-million) investment in African agriculture and food production over the next two years.
The CEO of Philafrica Foods, Roland Decorvet, stressed to Business Live that the company is investing in Mozambique — which imports 60-70 percent of its chicken meat requirements — and not in South Africa.
“The company sees immense potential to replace imported products with local production in Mozambique, and has secured a strong operating partner there with decades of experience in the poultry value chain,” he said.
For Novos Horizontes, which was founded in 2005, the partnership offers the opportunity to become the leading poultry producer in Mozambique, said executive chairman, Andrew Cunningham.
According to the company’s website, Philafrica Foods is wholly owned and operated by AFGRI Group Holdings. It is headquartered in South Africa, where it owns and operates animal feed mills, as well as grain mills and an oilseed crushing and processing plant.
AFGRI sold its poultry interests and one of its feed mills in South Africa in 2015 to focus on its core grain business.
Daybreak Farms’ acquisition approved
South Africa’s Competition Tribunal has approved the acquisition by PIC of poultry producer, Daybreak Farms, which was AFGRI’s poultry business until its divestment in 2015.
According to IOL Business Report, certain conditions must be met for the takeover, including that PIC must invest in “certain assets, management and administration of pensions and other benefits and compensation of employees emanating from injury or disease through the course of employment, respectively.”
Earlier this year, the African National Congress (ANC) political party called on the PIC to help South Africa’s struggling poultry industry, and Daybreak warned of impending job losses if chicken imports continued unabated.
Daybreak Farms produces and processes one million birds per week at its slaughterhouses in Delmas and Sundra, according to the firm’s web site. It also has its own feed milling operations and hatchery.
