CAPE TOWN - South Africa's poultry production increased 5 percent in the first eight months of this year, compared with the same period last year in spite of the Covid-19 environment, a statement from the Department of Trade, Industry and Competition said.
The government has become a partner in the Poultry Sector Master Plan, which was drawn up in November last year. The other stakeholders include poultry producers, processors, exporters, importers and labour. The aim is to grow the demand for chicken and also to increase the exports of cooked and raw chicken products.
The poultry sector, South Africa's biggest agricultural industry, has struggled to remain competitive in recent years despite multiple and large import tariff protection measures.
A study compiled for the Association of Meat Importers and Exporters last year said: “Trade protection to date has not been effective in encouraging domestic broiler meat production, as domestic production volumes have remained relatively flat since 2010, despite an increase in demand.
“The fact that the industry has not been able to become an effective exporter despite continuous and increasing levels of protection calls into question whether this is an effective strategy to safeguard jobs.”
Nevertheless, at a virtual meeting hosted by the South African Poultry Association last week, co-chaired by the Minister of Trade, Industry and Competition Ebrahim Patel and Agriculture, Land Reform and Rural Development Minister Thoko Didiza, the plan to drive exports to countries such as Saudi Arabia, United Arab Emirates and Qatar was discussed.
In addition, Southern African Development Community countries, and those within the African Continental Free Trade Area, would be targeted for export growth.
The department said further work had been done with trading partners to improve compliance with sanitary and phytosanitary measures, which would unlock further export markets.
South Africa has traditionally exported a limited volume of its annual production to neighbouring SADC countries, but an outbreak of avian influenza in 2017 saw many countries – including Botswana, Malawi, Mozambique, Namibia, Zambia and Zimbabwe – suspend their poultry imports from South Africa.
Despite the department's claim of increased production in South Africa, the country's biggest poultry foods producer, RCL Foods, reported a 38 percent decline in its 60-year-old chicken operations’ earnings in the six months to June 30.
The department said poultry producers had pledged to invest R1.7 billion to expand and improve production capacity, and some investment projects had been completed.
In addition, a financing model for contract farming had been developed to assist in assessing a producer’s business viability.
Since the master plan was signed, the government has implemented higher tariffs on certain cuts of poultry, and was investigating the structure of tariffs to provide a more effective trade environment for poultry.
Broiler producer Astral said this week that its earnings and headline earnings per share for the year to September 30 were expected to fall by not more than 25 percent compared with the previous year due to costs to manage the risks associated with Covid-19, and a complete shutdown in the quick service restaurant sector during the hard lockdown.
This shutdown saw more chicken being channelled to frozen production, resulting in higher stocks of individually quick frozen portions in the industry and downward pressure on selling prices to the consumer market.
BUSINESS REPORT