The South African Poultry Association (SAPA) is preparing an application for export accreditation in the European Union (EU) and Saudi Arabian markets, which GM Izaak Breitenbach says could have a material impact on the industry’s competitiveness in future. The Saudi Arabian authorities are due to inspect local production facilities soon, which form part of what is rigorous testing to comply with import requirements. Breitenbach explains that Saudi Arabia is seeking to diversify its supply base of chicken, as it is a net importer of chicken, mostly from Thailand. The country’s chicken demand is growing owing to a big population; however, Breitenbach says it will take time to solidify the relationship with the right customers within the country.
SAPA aims to have producers supply boneless portions to Saudi Arabia, and cooked chicken breast meat to the EU, as this region is a net importer of this product. Equally, Breitenbach expects that export volumes to the EU will build up over time. He assured attendees of a media briefing on the State of the Poultry Industry, on March 1, that South Africa does not need to increase chicken production for these markets, and has sufficient capacity to supply as it stands. Besides, it will take at least another 24 months before the industry can start exporting product to Saudi Arabia and the EU.
South Africa currently produces about 22.5-million chickens a week; however, this figure may decline considering the severe impact of loadshedding on the industry since late last year. Breitenbach explains that high stages of loadshedding significantly hamper slaughter programmes, which need to run for 24 hours a day. He estimates that loadshedding costs the poultry industry 75c/kg of chicken produced, owing to higher feed input costs as chickens eat for longer periods than planned while they are not slaughtered, as well as the chickens growing bigger in the meantime and impacting on slaughter weight specifications for suppliers. Breitenbach states that the poultry industry had to reduce production by 13-million chickens in December and January, by not letting eggs hatch. These production losses are over and above the 75c/kg of chicken loss.
Additionally, owing to high feed costs and dampened consumer demand as prices soar, chicken producers are selling chicken at an average loss of R2/kg at the moment, states Breitenbach. Breitenbach and Davids conclude that loadshedding will continue to put pressure on chicken prices, especially since its impact escalates at every level of the value chain towards the end product. Similar to what happened during Covid-19, the industry has reduced capacity to process and, therefore, a surplus of animals at farm level, coupled with a lack of capacity at processing level, can also impact on prices in a different way. It remains to be seen what the ultimate price movement of poultry products will be in 2023. SOURCE: SAPA unpacks green shoots, worrying factors in state of the poultry industry address (engineeringnews.co.za)