South Africa’s poultry imports to decline by 10% as production rises, imports duties increase

SOUTH AFRICA – South Africa’s chicken meat production is projected to increase by 4% to reach 1.57 million tons in 2021 from 1.51 million tons in 2020.

This is according to a Global Agricultural Information Network (GAIN) recent report by USDA, which attributes the rise in production to lower feed prices, increase in the import duties on bone-in & boneless chicken meat and the Poultry Sector Master Plan introduced in the country.

Poultry feed mostly made up of corn and soybean as the primary ingredients is the major cost factor in the broiler industry and contributes more than 70 percent to the total cost of a broiler producer.

The country in the recent crop season 2019/2020 produced its second highest corn crop in history with a 16.1 Million-ton bumper crop.

This bumper crop has suppressed local corn prices and is expected to continue in the 2020/2021 market year. Thus, feed costs declined compared to prior years and contributed to lower production costs.

South Africa produces 19.6 million birds per week, and poultry production is the largest product sector in agriculture in South Africa, ahead of all other animal sectors and ahead of all field crop and horticultural sectors.

United States Department of Agriculture

Other than lower feed cost, in November 2019, the South African government and the poultry industry signed a Poultry Sector Master Plan that it proclaimed to increase productivity in the poultry sector and protect the local domestic producers from alleged unfair trade practices and imports.

One of the measures used to accomplish the objective is increased import tariffs.

To this end the International Trade Administration Commission approved the South African Poultry Association’s (SAPA) application to increases the most favoured nation duties (MFN) on imports of bone-in chicken from 37 percent to 62 percent, and for boneless portions from 12 percent to 42 percent which was effected as of March 13, 2020.

This move was welcomed by the poultry industry, and it is believed that the tariffs will motivate more expansion and investment in the local industry and lead to increase in production.

Chicken imports to decline by 10%

With the new tariffs put in place and rise in production, the report forecasts that the country’s chicken meat imports will decrease by 10 percent in 2020 to 435,000 tons from the 539,000 tons imported in 2019 and further reduce to 357,000 tons in 2021, an 18% reduction.

The decrease in imports is expected to shift demand of the imports of bone-in and boneless meat from Brazil and the United States to the European Union (EU) because imports from EU member countries are not subject to the MFN duties.

On the other hand, the report forecasts that 2021 poultry exports will increase marginally to 51,000 tons as a result of the efforts arising from the Poultry Sector Master Plan to campaign for new markets and expansion in the local production facilities.

South Africa does not export a substantial amount of chicken meat as it is not yet self-sufficient in production.

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Its major export markets are neighbouring countries whom are also members of the Southern African Development Community (SADC) and the United Arab Emirates.

Consumption rate to stagnate in 2020

South Africa produces 19.6 million birds per week, and poultry production is the largest product sector in agriculture in South Africa, ahead of all other animal sectors and ahead of all field crop and horticultural sectors.

Although the poultry industry alleged the lack of growth on an influx in imports, the government has identified certain industry-wide structural issues that make it difficult for the small-scale, previously disadvantaged poultry producers to participate fully in the market.

Commercial producers contribute an estimate of more than 90% of the total poultry meat production in the country, while the small-scale producers contribute the remaining 10%.

According to a report by the then-Department of Agriculture, Forestry and Fisheries, there are 8 major commercial producers responsible for over 70% of the total broiler production, including RCL Foods, Country Bird Holdings and Astral Foods.

Despite the sector still operating as an essential service during the lock-down period from the onset of the COVID-19 pandemic, many poultry companies experienced losses as a result of it.

Quick Service Restaurants and hotels were closed during the initial months, thereby reducing the demand for chicken.

In 2020, poultry consumption is expected to remain flat at 1.94 million tons but to decrease in 2021 by 1 percent to 1.88 million.

South Africa is one of the major consumers of chicken meat in the world with a per capita consumption of 33 kg in 2019 as compared to the beef per capita consumption of 17 kg/year and 7 kg/year for eggs.

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