South Africa has a large domestic poultry sector that is well placed to grow exports and to create employment in the country’s struggling economy. However, some industry players say, various barriers are limiting the sector’s potential ability to do so.
The South African Association of Meat Importers and Exporters (AMIE) hosted a media briefing last week (Thursday, 26 May 2022) where experts such as Dr Mpho Maja, director for animal health at the national agri department, Donald MacKay, founder and CEO of XA International Trade Advisors, and Paul Matthew, CEO of the AMIE, discussed this issue.
The AMIE believes the country is missing a massive opportunity because it does not meet the health and safety standards required by trade blocs such as the European Union (EU). The country currently exports 26 000 tonnes of chicken per year, with an export value of R622 million. This, according to the sector, is negligible compared to other food exports like citrus which exported 1.5 million tonnes of citrus, fetching R15.9 billion in export value last year.
Even though the EU is not the only export market, the AMIE says getting into that market will make entry into other markets easier.
“What’s more, is that South Africa has duty-free status in the EU, which means it pays no duties to sell its products there. The EU has already said that it will buy South African products once the country meets the required health and safety standards,” said MacKay.
So what is blocking such a large domestic producer from reaching its export potential? One of the answers is in brine.
“Brining is particularly problematic, as it is prohibited in the EU and most of South Africa’s potential export partner markets,” he said.
South Africa’s local chicken now contains up to 15% brine after a 2016 legislation was passed. At the time, authorities found that domestic chicken pieces contained up to 60% water.
“The EU will only import chicken products that are free from antibiotics, hormones, brine, and feed that contains animal by-products. South Africa will need to work hard to meet these requirements,” MacKay said.
On the country’s plans to grow exports, Matthew said the company intends on establishing a dedicated export task group to facilitate access to export markets and to provide processing capacity for cooked poultry products, which he believed was especially desirable in the EU.
“We are eager to work with our partners in government and with local producers to fast-track our country’s export potential,” Matthew said.
“Government plays a critical role in securing the necessary trade conditions for export, and local producers will need to urgently resolve the health and safety challenges required to meet the standards of potential export markets.”
Other panellists at Thursday’s briefing said that, among the things South Africa must urgently do to realise its export potential, are:
- gaining access to countries with whom South Africa has preferential trade agreements;
- meeting the international health and safety standards and requirements of countries to which South Africa will export; and
- for local producers to reorient their operations to extract value from certain poultry cuts in markets that will pay a premium for them.
Enormous opportunity to grow exports
One of the key requirements of South Africa’s 2019 Poultry Master Plan is for the poultry industry to grow the export of local products.
“While there is enormous opportunity to do so, there is very little progress in this regard,” Matthew continued.
The industry’s existing technical efficiency must be paired with a renewed strategy to enter the global market. The benefits for local producers could be enormous. In the EU and other export markets, certain cuts fetch a premium whereas SA “cuts up a whole chicken and puts it into a bag, selling all the pieces at the same price,” the organisations said in a statement.
In a 2020 report, the South African Poultry Association said producers should be able to realise higher prices for dark meat cuts domestically, but are unable to do so in the face of large volumes of imported cuts from the EU and, more recently, from the US and Brazil. Despite anti-dumping quotas and tariffs on chicken meat imports, the association said these tariffs have done little to deter the dumping of bone-in portions on South African shores.
“The EU imports 900 000 to 1 million tonnes of chicken breast per year, and it was buying that breast for about 6 Euros per kilogramme in March 2022. South African producers, who have a surplus of chicken breasts, are selling their breasts locally at a third of that price, so the upside for local producers is enormous,” said Mackay.
Part of developing a premium export product market, would involve the production of cooked chicken, which is in high demand in certain markets, including the EU. The AMIE said that a number of South African processors already have the required facilities set up to meet this need.
“There is enormous upside economic value if local producers reorient their operations to extract value from product preferences and price premiums in the different markets,” Matthew said.
With South Africa’s unemployment rate at 35.3% and youth unemployment at a staggering 65.5%, the poultry sector is confident that an increase in production capacity across large, medium to small enterprises is “an opportunity that must not be overlooked”.
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