Unlocking Trade Opportunities for Emerging Broiler Industry Farmers - AFASA Conference Presentation
"Mike de Klerk presented at the AFASA Conference in Bloemfontein, highlighting export opportunities and growth constraints for South African broiler industry farmers. The presentation explores main export opportunities for producers, challenges faced by small producers, and potential pathways for market entry and development. Recommendations include investments in SPS capacity and value-added product offerings to enhance competitiveness on a global scale."
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Presentation Transcript
UNLOCKING TRADE OPPORTUNITIES FOR EMERGING BROILER INDUSTRY FARMERS Mike de Klerk AFASA Conference, Bloemfontein, 8 October 2019
OUTLINE Introduction Main export opportunities for SA producers Main export opportunity for small producers Growth opportunities/constraints for small producers
3 INTRODUCTION Presentation based on study conducted for EU Delegation in South Africa: The South African Broiler Industry: Competitiveness, Trade and Options for Growth and Development https://sadc-epa-outreach.com/publications/78-sa- broiler-industry-competitiveness-trade-and- alternatives-for-growth-and-development
4 MAIN EXPORT OPPORTUNITIES FOR SOUTH AFRICAN BROILER PRODUCERS SA exports only a small percentage of its chicken output Frozen uncooked chicken breasts realize a higher price in most developed markets than in SA To enter offshore markets, SA producers will have to produce to different specifications (larger birds, no brining, no growth stimulants) and will have to meet importers SPS requirements Will probably require substantial new investments by the industry and effective cooperation with Department of Agriculture EU offering assistance to help develop Department s SPS capacity
5 MAIN EXPORT OPPORTUNITIES FOR SOUTH AFRICAN BROILER PRODUCERS Uncertain if firms will see opportunity as profitable enough to make investments Small producers would have to sell at same price as large producers and meet same specifications and SPS requirements difficult for small producers? Best present export opportunity: value added cooked/processed chicken; several large producers now in this market SPS requirements not as difficult to meet, but substantial new investments still needed difficult for small producers? Government should demand these investments in exchange for any new tariff protection
6 MAIN EXPORT OPPORTUNITY FOR SMALL BROILER PRODUCERS Best indirect export opportunity for limited number of small producers (+/- 50?): to become contract growers for large producers engaged in export Several black contract growers already, but: o Have to be very efficient producer, very capable re quality and disease control; very closely monitored o Profit margin per bird very small -> have to produce on large scale to be profitable -> large investment needed (+/-R15 million per grower) o Subsidized loans from government/international institutions can help, but substantial own equity contribution needed to avoid over-gearing
7 GROWTH OPPORTUNITIES/CONSTRAINTS FOR SMALL BROILER PRODUCERS Small producers of live birds get better price per kilo than large producers, but costs also higher Large firms could help by selling inputs procured at lower prices to small producers Market for live birds limited, strictly local Price of slaughtered birds limited by low price at which large producers sell Difficult for small producers to grow organically into large producers without big capital investments needed to produce at scale to achieve lower costs Also need to be close to feed mill, vet, abattoir, cold chain
8 GROWTH OPPORTUNITIES/CONSTRAINTS FOR SMALL BROILER PRODUCERS Government grants for new hen houses need to be carefully targeted to avoid competing with existing small producers Capacity utilization of most existing small hen houses already very low (average +/-30%) so more grants don t really help small-scale industry. .................................
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