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Poultry Sector Master Plan
Poultry Sector Master Plan
Poultry
Sector
Master Plan
November 2019
the dtic Campus DALRRD Department of Agriculture, Land Reform and Rural Development 2. Overview and background analysis..................................................................................................................... 4
77 Meintjies Street DOH Department of Health
3. Strategic objectives.............................................................................................................................................. 6
Sunnyside the dtic Department of Trade, Industry and Competition
Pretoria EBIESA Emerging Black Importers and Exporters of South Africa 4. Required actions.................................................................................................................................................. 8
0002
EU European Union
5. Support for the Poultry Master Plan.................................................................................................................. 14
FAWU Food and Allied Workers Union
the dtic
The Food and Beverage Manufacturing Sector Education Training Appendix ................................................................................................................................................................ 15
Private Bag X84 FoodBev SETA
Authority
Pretoria
IDC Industrial Development Corporation
0001
ITAC International Trade Administration Commission
MDM Mechanically Deboned Meat
the dtic customer contact centre:
0861 843 384 SA South Africa
the dtic website: SABS South African Bureau of Standards
www.lhedtic.gov.za SADC Southern African Development Community
SAPA SA Poultry Association
SARS South African Revenue Service
SPS Sanitary and Phyto-Sanitary
Stats SA Statistics South Africa
TIPS Trade and Industry Policy Secretariat
1
1
Introduction
This Poultry Sector Master Plan has been developed in a
close partnership between Government and a number of
stakeholders in the industry, drawn from poultry farmers,
processors, exporters, importers and organised labour.
2 3
2
Overview
The poultry sector plays a key role in South African Figure 1 demonstrates clearly that: Urgent challenges facing the sector
life: • Consumption of chicken meat in South Africa has grown It is clear that the South African industry faces critical
substantially although more slowly after 2008 challenges, some of which are structural and others that
• It provides an important, affordable source of protein
and
• Production has stagnated as imports have risen, with are driven by factors over which we have greater control:
for millions of households, and is a staple of the South
African dinner table imports having risen fourfold over 20 years. 1. Cost of feed: The cost of feed makes up a large portion
of the cost of chicken production. Maize and soya prices
• It is a pillar of the South African agricultural economy,
background
The potential growth in local production has therefore been are determined internationally but tend to rise for South
adding value to our maize and soya crops, and serving displaced by imports. This has mainly been due to the lower African producers in drought years. Many countries
as a key customer of the farming sector, including a prices at which imports have come into our market. Market subsidise their primary farming sector, allowing cheaper
significant number of emerging farmers conditions and trade agreements have brought significant inputs to their poultry sectors.
analysis
• Barriers to entry are reasonably low, allowing emerging quantities of low-priced chicken products into our market.
2. Scale of production: The reasonably small scale of
farmers and small scale participants and local economies These have put pressure on local prices and reduced the
production in South Africa makes us vulnerable to
to supplement industrial scale activity market share of South African producers. While there may
exporting countries which exploit economies of scale. In
• Poultry is also an important sector of food processing, have been benefit for consumers, we have been unable
addition, we tend to slaughter broilers at a lower weight
adding value and creating jobs throughout the length to drive growth in the industry. At the same time we have
than our competitors, placing us at a disadvantage in
and breadth of the country. been unable to make up the differential through exports. At
certain markets.
present South African poultry exports are marginal at about
The demand for poultry products has grown substantially 2% of production despite excellent access to a variety of 3. Segmenting production: In recent years several large
in the democratic era, partly reflecting higher incomes markets. As a result, our industry is now vulnerable, and poultry exporting countries have targeted South Africa’s
across the South African population. For the first 15 years faces significant threats to our existing capacity. market for brown meat. These exporters provide white
of democracy, the production of poultry also grew but this meat to the European and American market where much
began to stagnate around 2008. Production has been static Detailed trade figures demonstrate that imports have higher prices are paid for breast meat, and exported the
for the last decade despite the fact that consumption has continued to grow even when we exclude meat products remaining brown portions to South Africa at low prices.
continued to grow. This has happened because imported that are not made in South Africa such as Mechanically This is known in the trade as ‘balancing the carcass’ and
poultry has come into the economy in large quantities, Deboned Meat (MDM). Indeed, imports of broiler meat is widely practised.
displacing South African meat especially at the lower end. (excluding MDM) have increased by 73% over the past five 4. Inability to export: Despite the fact that we have tariff-
Tariffs were increased substantially in 2013, but this has not years. free access to Europe we have not been able to export
arrested the growth in imports. poultry to Europe largely because we have not developed
If this trend is not reversed then the South African industry
can be expected to stagnate and slowly decline affecting the necessary systems to meet the sanitary and phyto-
Some of our large poultry production companies are
jobs and livelihoods across the value chain from maize and sanitary requirements of the European market. Our
regarded as highly efficient in their production systems.
soya farming to food processing. It would also threaten our exports to other countries are also very limited, with
Despite this we have been unable to compete effectively
food security in the longer term. exports making up no more than 2% of production.
with imports especially at the lower end of the price range,
This has limited our ability to compete, and to grow our
and we have failed to grow exports.
industry.
5. Transformation: Although some progress has been
made, we have not moved sufficiently with regard to
black ownership throughout the value chain. Some
immediate opportunities exist to improve the situation.
Figure 1: SA Poultry Production, Consumption and Imports, 2011-2018 (tons) Figure 2: SA Poultry Imports, 2013-2018 (tons)
2 500 000 600 000
500 000
2 000 000
400 000
1 500 000
300 000
1 000 000
200 000
500 000
100 000
0 0
2011 2012 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Production Imports Consumption Total poultry imports Chicken meat excl MDM MDM Bone in portions Boneless cuts Whole bird
4 5
3
Strategic
Poultry farming offers important opportunities for economic Our strategic objectives are therefore to:
development in South Africa including:
1. Continue to increase the consumption of chicken meat
• Potential expansion of both maize and soya production (as opposed to processed chicken product) in absolute
6 7
4
Required Pillar One: Expanding and improving production – targets to be met by 2023
In order to achieve these objectives, we will have to take
specific and sustained actions. These are set out in the five
pillars that are appended to this document and constitute
actions
the heart of this plan. 1.1: Programme: Strategic partnership between SAPA and Grain SA to increase the supply of maize and soya to
Monitoring and implementation
the poultry sector and to reduce prices
This Master Plan serves as a basis for the expansion and Requirements Targets and Commitments Oversight/Responsibility
development of the sector. Success will require sustained • Expand the consumption of poultry feed • Additional 300 000 ton consumption of • IDC to partner with Grain SA and SAPA to
implementation and ongoing commitment by a variety of by 300 000 tons p.a. soya/maize supporting approximately 300 explore possible arrangements to increase
players. It will be critical to monitor progress against this • Explore mechanisms to use this higher new jobs supply in targeted areas, and to reduce
level of demand to negotiate better prices costs
plan. This will be done through the Poultry Sector Master
• Council to identify additional steps to
Plan Council, which will be led by the Ministers of Trade, achieve this goal
Industry and Competition, and Agriculture, Land Reform
and Rural Development.
1.2: Programme: Increased scale of production and investment to meet increased demand and to support
It is envisaged that the Council will meet quarterly in the exports
first year and bi-annually thereafter. the dtic will serve as a
Requirements Targets and Commitments Oversight/Responsibility
secretariat to the Council and will be assisted in this regard
by DALRRD and SAPA. Details of Council membership will • Increase production of broilers by • SAPA members to produce 1.7 million • the dtic and SAPA to establish mechanism
1.7 million birds per week (9% increase additional birds per week to report and track investment and
include principals from: over three years) production commitments twice annually
• R1.5 billion investment in production
• Expansion of production facilities, facilities by SAPA members of which 80%
• Poultry producers, including large integrated producers,
including production of cooked chicken for completed by 2020
contract farmers, and independent producers export • Additional 3 600 jobs
• Poultry importers and exporters
• Organised labour 1.3: Programme: Expand and improve the contract farming sector:
• Government departments including the dtic, DALRRD, • Establish 50 new commercial-scale contract farmers with agreements to supply specified large integrated producers
Department of Health, and provinces
• Review the commercial arrangements to ensure that contract farmers receive fair and equitable compensation and fair
• Other state institutions such as the South African access to inputs
Revenue Service (SARS) (Customs), Industrial
Requirements Targets and Commitments Oversight/Responsibility
Development Corporation (IDC), Land Bank and others
as appropriate. • SAPA members to help establish and sign • 50 contract farming operations at a cost • SAPA to initiate, lead and coordinate the
contracts with 50 new contract farmers of approximately R35 million each or process of establishing 50 new contract
The Council will inter alia, address the following: (in addition to the existing 70 commercial- R1.7 billion farmers
scale contract farmers already in business) • Approximately 1 000 new jobs • SAPA members to sign offtake agreements
• Develop a concrete action plan to underpin each pillar
• SAPA and contract farmers to review and and to provide direct farming and other
and commitment in the Master Plan report on commercial arrangements assistance to contract farmers
• Monitor implementation of the key actions agreed and • SAPA to initiate discussions with insurance • In addition to the above, the Land
industry to identify effective insurance Bank to assist with finance for land
identify additional measures required to realise the
cover for contract farmers where appropriate and IDC to consider
agreed vision Poultry scheme to help fund additional
• Ensure expeditious implementation of the necessary expansion of production for contract and
independent farmers
sanitary and phyto-sanitary (SPS) measures required to
• Poultry Master Plan Council to receive
expand into export markets report on commercial arrangements
• Analyse the trade in poultry, both imports and exports, between contract farmers and producers
to determine the impact of the Master Plan and to advise
on measures to realise the vision and commitments in 1.4: Programme: Improve productivity and worker development through investment in skills
the Master Plan
Requirements Targets and Commitments Oversight/Responsibility
• Identify and set out targets for advancement of ownership
• Employers and labour to develop or • Large and medium employers, trade • SAPA, AMIE, EBIESA and individual
by black South Africans and workers across the poultry
enhance training initiatives aimed at unions and the relevant SETAs to develop employers
value-chain, as well as inhibitors to achieve these greater efficiency, clear career progression strategic plan for skills enhancement in the • Trade Unions/Labour representatives
• Consider practices and standards in the industry and and improved employment equity sector by Q3 of 2020
• FoodBev SETA
their impact of development of smaller and/or black- • AgriSETA
owned poultry enterprises, with a view to addressing
unnecessary inhibitors
• Set up a forum of engagement with the finance sector.
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1.5: Programme: Expand support to independent farmers 2.3: Programme: Promote further research into industry cost drivers and take action where appropriate
Requirements Targets and Commitments Oversight/Responsibility Requirements Targets and Commitments Oversight/Responsibility
• Work with provincial governments, • Affected provinces to review existing • DALRRD and the dtic to lead • Work with the Bureau for Food and • Actions to be developed arising out of • the dtic
industry players, development agencies grants and to target these to support • Provinces to contribute Agricultural Policy to investigate cost research • SAPA
and non-profit organisations to provide independent and contract farmers drivers for poultry production
• SAPA to put viable support plan for
support to independent poultry farmers • SAPA to initiate and implement independent farmers to Council for
programme of support, including support consideration and approval 2.4: Programme: Task team to work with retailers to:
in relation to animal health
• African Farmers Association of South
• the dtic and DALRRD (with industry Africa to contribute • Explore mechanisms to enhance offerings of cheaper packs of brown meat to price sensitive consumers
support) to initiate discussions with
insurance industry to consider effective • Retailers to promote South African and where possible local suppliers
insurance products for small-scale farmers • Partnership between SAPA and Proudly SA to promote SA poultry
and to report to SA Poultry Master Plan
Council Requirements Targets and Commitments Oversight/Responsibility
• Discussions to be held between SAPA, • Buy South African poultry campaign • the dtic
1.6: Programme: Increase levels of Black empowerment and particularly Black ownership the dtic, DALRRD and retailers • Support for local poultry by retailers • SAPA
• AMIE
Requirements Targets and Commitments Oversight/Responsibility
• DALRRD
• Promote improved BEE in the sector, • Explore the use of the Agri BEE fund • the dtic to initiate discussions with various
especially among integrated producers • IDC and Land Bank to consider partnering players
and link to state procurement with existing contract producers to grow • Integrated producers to report on their Pillar Three: Driving exports
• Promote Worker Share Ownership further and develop beyond contract levels of Black empowerment and on
Programmes, especially within integrated farming initiatives to improve BEE levels and
producers performance
3.1: Programme: Export cooked meat to various markets
• Leverage existing state ownership and • AMIE and SAPA to present proposals for
existing provincial funding streams to mechanisms and targets to increase levels Requirements Targets and Commitments Oversight/Responsibility
catalyse additional Broad-Based Black of Black ownership throughout the sector
ownership • Council to finalise targets and timeframes • Requirements to be established urgently • Begin exporting Q1 2020 • SAPA
per destination and appropriate measures • AMIE
effected
• the dtic
Pillar Two: Driving domestic demand and promoting affordability • DALRRD
2.1: Programme: State procurement: Consider designating chicken meat for local supply 3.2: Programme: Expand Halaal meat exports
Requirements Targets and Commitments Oversight/Responsibility
Requirements Targets and Commitments Oversight/Responsibility
• Establish requirements for various markets • Significant expansion in such exports by • SAPA
• the dtic to investigate possible • Extent and nature of state poultry • the dtic with support of DALRRD
in co-operation with red meat exporters 2021 • AMIE
designation of poultry, which would ensure procurement to be established by Q2 0f • Industry to commit to competitive pricing and Halaal certification authorities and
that all state procurement of poultry be 2020 for state procurement • the dtic
ensure that these requirements can be met
designated for local supply only • Decision on designation by Q3 of 2020 • DOH
and certified
• the dtic/Treasury to discuss pricing
mechanism with the industry to ensure
value for money for state institutions 3.3: Programme: Establish detailed export agreements with various countries including veterinary requirements
Requirements Targets and Commitments Oversight/Responsibility
2.2: Programme: Monitor chicken prices
• In various countries we have trade access • Detailed programme by Q1 of 2020 • the dtic
Requirements Targets and Commitments Oversight/Responsibility but have not put the detailed systems in • DALRRD
place to facilitate trade
• the dtic to work with Stats SA, • Monitor and report prices to Poultry • the dtic • SAPA
wholesalers and retailers to monitor prices Master Plan Steering Committee with the • AMIE
of various chicken products assistance of the National Agricultural
Marketing Council
• Monitor the impact of trade measures on
prices
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3.4: Programme: Establish detailed import requirements for selected countries under AfCFTA and make 4.4: Programme: Act against Round tripping
appropriate arrangements
Requirements Targets and Commitments Oversight/Responsibility
Requirements Targets and Commitments Oversight/Responsibility
• Act against parties practising round • Consultation with Customs authorities • the dtic/SARS
tripping at the borders, particularly borders with a view to investigating possible
• Identify countries that may wish to procure • Detailed programme by Q1 of 2020 • the dtic
with our immediate neighbours offences at relevant border posts, identify
South African poultry, in co-operation due to the limited time available before
vulnerabilities in the system and address
with industry, establish contact with implementation
these
the appropriate authorities and drive
implementation
4.5: Programme: Selling of quotas
3.5: Programme: Sanitary and Phyto-Sanitary requirements
Requirements Targets and Commitments Oversight/Responsibility
Requirements Targets and Commitments Oversight/Responsibility
• Ensure that where quotas exist, that • Consult with relevant authorities and the dtic/SARS
parties comply with the rules for the use implement
• Further consultation to take place on the • Substantial progress on all items by mid • DALRRD
of quotas and that action is taken against
SPS plan 2020 • the dtic on-selling and fronting
• AMIE to assist with relevant expertise • DOH
• Institutional mechanisms to be devised • SAPA
to ensure that SPS plan is funded, 4.6: Programme: Effective communication measures to be established between authorities and the industry
• AMIE
implemented and monitored
Requirements Targets and Commitments Oversight/Responsibility
• Review the regulations governing the • Regulations to be reviewed by end Q1 of • the dtic
manner in which imported chicken must 2020 and new regulations published as 5.1: The parties note that the ITAC process will be concluded in terms of the applicable legal framework, and
• DALRRD
be packed and labelled with a view to soon as possible thereafter
• DOH
that this is expected soon.
ensuring that all imports can be traced to • Discussions to take place with SA Bureau
a single producer and that such producer • SABS
of Standards and South African retailers to
meets the required standards require clear labelling of origin
5.2: Support efforts by Government to immediately direct ITAC to begin a further process of reviewing the tariff
4.2: Programme: Thawing of frozen product framework for the poultry industry as a whole, including the following:
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5 Appendix
Support for
The following parties have expressed support for the Poultry SAPA members: Grain Field Chickens Pty Ltd
Master Plan, and commit to working towards achieving its Ducko Processing cc
outcomes: Tatsoyaafrica Corporate Trading & Projects Mountain Valley a Division of Astral Operations
Goodwill Chickens
the Poultry
Eagles Pride Hatchery Pty Ltd
Cheyeza Farming Red Farms Agripark Pty Ltd
Boshielo Farming
Stonor Farm SAPA contract farmers include:
Master Plan
Opti Agri
On behalf of the South African government
County Fair - A Division of Astral Ikutana
Bushvalley Chickens KwaMhlanga Poultry
Steinthal Landgoed List Cleaning Chemicals
Ndiza Poultry Rearing Pty Ltd Mo-Chicks
On behalf of the South African Poultry Association Fourie’s Poultry Farms Pty Ltd T/A Chubby Chick Outcome Prop. 27 CC Site 1
Eagles Valley Poultry Outcome Prop 27 CC Site 2
Umbuluzi Farm Chickens Pty Ltd Sdudla Chicks (Pty) Ltd Site 1
JMB Harries Faming cc (RHBC44) Sdudla Chicks (Pty) Ltd Site 2
Marsela Trading Sdudla Chicks (Pty) Ltd Site 3
On behalf of the Association of Meat Importers and Exporters
Anton Voere Pty Ltd T/A Chickcheeks Boerdery Sebenzani (Sinamuva)
A & J Broiler Breeders Pty Ltd Sefala Logistics
KwaZulu Natal Poultry Institute Poultry Harvest 1
L & A Farming & Project Poultry Harvest 2
On behalf of the Emerging Black Importers and Exporters South Grandchicks Pty Ltd Rietvallei 1
Africa Tirisomaatla Projects & Trading Rietvallei 2
Kwamhlanga Poultry Project Pty Ltd Klipspruit 1
Poultry Harvest Pty Ltd Klipspruit 2
Kwena Chicks Gro Africa Farming
On behalf of the Food and Allied Workers Union Phetogo F Enterprise For Real Chicks 1
Warrenton Super Chickens For Real Chicks 2
Moyo Mnade Chickens Freecka Landgoed
Quantum Foods Pty Ltd Modderbult Boerdery 1
Young Farmers Agric Business Pty Ltd Modderbult Boerdery 2
Ndaba investigation Security Noycedale
Ndiambani Agric Coop Poortjie
Mashashane Hatchery Shalev 1
African Ranchers Pty Ltd Shalev 2
Essaurinca Farm 1 (RRBC0105) Sintier Poultry
Kgwerano Hospitality Services Tulipvale
RCL Food Consumer Pty Ltd Kwena Chicks
Ryall Trading CC Raseto
Rossgro Pluimvee Eiers Selame
Bobbsies Chickens Prime Trade
Westwood Poultry Farm Pty Ltd Al Najam
Goldi and Festive - A division of Astral Operations Limited Peabro
Daybreak Farms Makhalempongo Chicken (Pty) Ltd
Lufafa Hatchery Pty Ltd Essaurinca Farms 1 B105
Ratan Agro Industries Essaurinca Farms 2 B106
Five Feathers Food Impro Chickens
Ross Poultry Breeders, a Division of Astral Operations De Goedehoop
Country Bird Holdings Siyankulisa
National Chicks a Division of Astral Operations Ltd Sunrays Farming Enterprise
A A Quality Chickens JR Ngwenya
Raseto Agricultural Enterprise cc Marnad Eiendomme (Pty) Ltd
Grootvlei Kuikens Zenzeleni Cleaning and Transport
Karoo Hatchery Pax Agricultural Primary
14 15
Veritas Agri Bassett & Walker Int
Izindonga Ze-Africa Trading Tyson Int Inc Europe
Matholwana 747 (Pty) Ltd Sanger Australia
Ubuhle Siyazenzela Pro Food
ABPA
AMIE members and associate members: Dawn Meats
FOB Trading
Assign Trading Partners Network
Federated Meats USA Poultry Council
Dee Imports
QK Meats
Excellent Meats
BRM Manufactures
Federated Meats
Freddy Hirsch Group
Shoprite Head Office
Bidvest Foodservice
Roots Cold Storage
DC Meat
Woolworths
Gluckmann Family Trust
BMS Select Foods
Deepcatch Trading
Shoprite Checkers
Britos Food International
Weddel Swift SA
BRF Foods Africa
BJK Industries
Marios Meats
Profood Africa
New Style Pork
Vion Foods
CP Intertrade
Enduro Trading
Merlog Food
Mkabayi Group
Frey’s Food Brands
Kintetsu express
Tomex
Master Good Hungary
P J Impex Inc
Iberdigest
Swift Trade
Bord Bia - Irish Food board
Leadex SAS
Lamex Foods Brazil
Nowaco A/S
SERA INT
Lanex Co
FEDECO
Plukon
ESS Food
USA Meat Export Federation
Mirasco
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Department of Agriculture, Land Reform and Rural Development (DALRRD)
20 Steve Biko former (Beatrix) Street,
Agriculture Place, Arcadia,
Pretoria, 0002
South Africa
www.dalrrd.gov.za
www.thedtic.gov.za