How South Africa’s poultry industry addresses challenges

The South African poultry industry continues to experience its own pressures and demands, but there are solutions to the sector’s difficulties.

Mark Rubens |
Mark Rubens |

The South African broiler industry has faced its fair share of challenges, and while the longest drought in recent history may have grabbed most headlines, it has been but one of various difficulties that chicken producers have had to face.

WATT Global Media spoke to Loutjie Dunn, national technical manager for Country Bird Holdings and Franscois Crots, technical sales director monogastric nutrition with AFGRI Animal Feeds to find out what they see as the sector’s major difficulties and how they may be solved.

Franscois Crots 1

Franscois Crots, technical sales director monogastric nutrition with AFGRI Animal Feeds, believes that the challenges of the South African poultry industry may be a little more intricate relative to those of others, but with proper discussion, and given the opportunity, the sector will have a bright future. (Benjamin Ruiz)

The good rainfall and crops enjoyed by South Africa last year came on the back of one of worst droughts in decades, initially hitting the north of the country and then the cape. This lack of rainfall may not have harmed the poultry industry as hard as it hit other livestock producers, but the sector did not escape unscathed.

Falling water levels exacerbated mineral and microbiological issues due, in part, to greater burdens on strained infrastructure in the country’s growing towns and cities, while the drought’s impact on sunflower growers resulted in reduced supplies of litter. This, in turn, lead to growing demand for woodchips, the felling of trees and associated transport costs and, in some cases, the use of roadside trees for chips and consequent contamination problems.

But more than any of the above, the biggest impact was on the cost of feed.

Crots said: “You go through a drought year like 2016 and you fall from being competitive to not even close to being competitive.

“Then you get a bumper crop, like we had in the last season with maize, and then our raw material prices go from an import parity base to an export parity base.”

Where rainfall and its impact on crop and feed production are concerned, the country will always be hampered in comparison with other major producers. Crots continued that, in South America, for example, rainfall may average 1,100-1,200 millimeters per year, while in South Africa, in a good year, there is rainfall of 550-650 millimeters annually.

Issue of imports

The biggest single source of chicken in the South African market is imports. With imported chicken now approaching 30 percent of the market, it is seen as a threat not only to local chicken and feed production, but its displacement of local production is seen as having wider implications, and market forces alone are not viewed as offering a solution.

The South Africa market comprises primarily legs and thighs which, in theory, should leave the more valuable locally produced breast available for export, resulting in a degree of balance. This, however, has proved difficult.

Dunn commented: “We could export breast meat at a very good profit if we were allowed to. On paper, it seems to be open until you challenge the system, and then there are all sorts of phytosanitary stops that prevent you from doing it.”

He continued that if the same countries sending legs and thighs to South Africa were to take South Africa’s breast meat, it would go some way to countering the country’s problems.

And one of South Africa’s largest problems is unemployment which, he believes, the poultry industry could contribute to lessening. Every 10,000 tons of chicken imported into the country is the equivalent of 1,000 jobs lost, according to a recent study, so with the country importing approximately 560,000 tons of chicken meat annually, import substitution could lead to significant job creation, with all the benefits that would bring.

“It does not matter how cheap the chicken is that we import into the country. If you don’t have a job so that you earn money to buy it, it’s too expensive,” Dunn said. â€śWe do have the raw materials, as well as the facilities, and everything is available in the country. We can produce it ourselves.”

Franscois Crots 1

Working within the World Trade Organization agreements, South Africa could do more to foster its agricultural sector with the consequent benefits that would bring, believes Loutjie Dunn, national technical manager for Country Bird Holdings. (Benjamin Ruiz)

Societal change

Alongside the growing pressure from imports, land expropriation is also is also under discussion. However, this need not necessarily be a threat to the industry.

Crotts and Dunn believe agriculture could be transformed in a profitable and sustainable manner if the issue of expropriation is thoroughly examined and implemented properly. In the past, land has been given to disadvantaged people without proper support and the result has been a mess. The South African poultry industry stands ready to assist and prevent this from reoccurring.

By way of example of how such change can work, Crots pointed to the case of his company, which separated out its poultry division to form Daybreak Farms, selling its farms via soft loans to black farmers who act as contract producers.

Daybreak provides technical know-how on feed formulation, for example, along with other support. A committee of technical advisers to ensure that farms don’t regress and that company standards are met or exceeded was set up, but ultimately the farms are owned by the farmers and it is up to them to make them successful.

But he also sounds a note of caution, pointing out that if Daybreak is unable to compete in the market it, and its farmers, will not be successful and that even with the best farms and the best support in the world, Daybreak will not be able to pay its farmers.

While there is optimism that this transformation can be handled successfully, in the short term, concerns over expropriation have affected the value of arable land resulting in questions over the economic sustainability of agricultural production, making planning difficult and throwing somewhat of a shadow over agriculture until the elections later this year.

The South African population has grown by more than one-third over the past couple of decades, and while this may result in many more potential local consumers – chicken consumption is rising by 4-5 percent annually – it is also putting a strain on the country’s infrastructure, which is having an impact on sourcing inputs and delivering product. But Crotts and Dunn remain optimistic, believing that South Africa is now progressing into its “best century," and that the chicken industry, given the opportunity, could play a significant part in contributing to the country’s success.


South African feed sales down as poultry sector suffers

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