Feeding southern Africa?


Growing the animal-feed-to-poultry regional value chain

In 2016 the South African poultry sector faced intense pressure from two sides in the form of much higher input costs and increased imports of low-priced chicken from the European Union and the USA. Poultry firms have called for increased protection against imports. Instead of taking a short-term view, we argue that the current crisis highlights the need for a regional strategy for a competitive poultry value chain across southern Africa.

Coordinating investment and production along the value chain means working together across borders.

Competitiveness in poultry requires coordination to achieve low costs and efficient production throughout the value chain, from feed and breeding stock through broiler production to slaughtering and retail of the final poultry products. Transport and logistics play a role along the whole chain.

Countries such as Brazil have implemented effective national strategies to develop an integrated value chain from the main feed inputs of maize and soya to penetrating export markets. Brazil is a very large country which includes huge areas of agricultural land with high rainfall. In South Africa's case the best land for expanded low-cost agriculture, especially given climate change, is outside our borders in countries such as Zambia. Coordinating investment and production along the value chain means working together across borders, particularly in the production of lower-priced soya and maize as inputs into animal feed.

Huge potential for regional development

South Africa is a substantial net importer of soya with the result that prices in the country are stuck at import parity levels (around US$440/tonne in 2016), much higher than in the exporting countries of South America from which the soya currently comes. Maize prices in South Africa have generally been at export levels (around US$150/tonne) reflecting the surplus production in most years. However, in 2016 due to the drought, yellow maize prices in South Africa were at import levels of around US$220/tonne (a 50% hike from US$150/tonne).

2016 therefore saw a triple whammy for the poultry sector with high maize prices on top of soya prices, along with increased competition from imports. Rising demand from economic growth and urbanization across the region mean the demand-side pressures will only increase.

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