ChickenFacts INVESTIGATES

Ever since ChickenFacts began to unpack the Poultry Master Plan, we have uncovered a few claims by role players that raise more questions than answers. We have tried to assemble the facts around some of these claims, with little success. In the interests of transparency, we bring you these claims and the results of our investigations. In poultry producer Astral’s 2018 audited financial results. On page 143, under Capital commitments, the company announces that just over R1 billion has been approved to increase slaughter capacity by approximately 20%. The significant investment decision was taking almost a year and half before the Poultry Master Plan was negotiated and signed by industry role players.

SAPA INVESTMENTS

In edition 5 of the SAPA online magazine, pg 15 the culmination of this investment is highlighted: the first automated processing plant in South Africa. On a slide titled Crunching the numbers, it breaks down Astral’s investment to deliver 800 000 extra Chickens as follows;

• R245 million on Breeding and hatching facilities

• R631 million Processing plant

• Then the SA poultry industry invested,

• R224 million on contract growers

ASTRAL’S INVESTMENT

Astral needs to be applauded for making this massive investment and this is clearly the reason why they are the biggest poultry producer in South Africa.On the 22nd February 2022 in a media release, SAPA through Mr Aziz Sulliman its Chairman says:

“ Prior to the masterplan (2019) the industry slaughter and capacity matched at 19 million birds

per week. In line with the R1.14 billion investment from industry, slaughter capacity increased to

22.5 million birds per week.”

TRANSFORMATION INVESTMENTS

“The industry has so far created nearly 10% increased capacity for black farmers. It has provided R343-million in finance to cover the cash flow for black farmers and this will increase to a total of R466-million in 2022. Since 2019, R570-million has been spent on building poultry houses, and this will increase to R750-million by the end of 2022”

The numbers quoted above by Mr Sulliman are impressive.

ChickenFacts however has not been able to ascertain from SAPA whether the investment is as per Astral’s initial number in 2018 or an investment made after the Poultry Master Plan was signed into effect and the duty on bone-in and boneless imports was increased.

INVESTIGATING SAPA

When we asked SAPA what the R1,4 billion in the Poultry Master Plan had been spent on, the reply was that it was being invested by the poultry industry in increasing their own capacity. This sum of money is therefore suspiciously similar to Astral’s budgeted expansion plans even before the Poultry Master Plan was announced.

Our only conclusion – in the light of no information indicating otherwise – is that the R1,4 billion that SAPA claims to have invested in the industry to empower emerging farmers is rather the R1.4 billion that Astral had budgeted to expand its own company even before the Master Plan was signed. Any benefit to emerging farmers, therefore, is simply a by-product of their own expansion. And the 3 600 expected new jobs were created within Astral. While we applaud Astral for the expansion of their own capacity and the subsequent job creation, we feel it is disingenuous for SAPA to claim that this investment is entirely intended to empower emerging farmers.

ENGAGING AFASA

When we engaged with AFASA (African Farmers Association of South Africa) in order to get their perspective on this investment and growth, we were unable to find any black poultry farmers that had received any funding or skills development via SAPA. By contrast, we were told that the emerging farmers that were being described as ‘contract growers’ were merely being engaged as suppliers to the five large companies. They had to stick to strict supply quotas and were not allowed to sell their product elsewhere. They found this was limiting their ability to farm productively and effectively creating a ‘buyer’s monopoly’ which also had the effect of consolidating the power and influence of the five large companies that already dominate the industry.

SAPA REFUSES TO ANSWER

We asked SAPA if we could interview any of their contract growers, emerging black farmer suppliers, bursary recipients, emerging farmer partners… indeed any one of the thousands of farmers that they claim to be assisting. They refused, saying that they did not have permission to share contact details. When we asked them if it was possible to obtain such permission, they did not reply. We have been unable to trace any of these partnership farmers through any other mechanism or organisation. We therefore only have SAPA’s word that any such empowered farmers exist.

WHAT WE’VE SUMMED UP

*A sum of R1,7 billion has indeed been invested in the poultry industry, namely in increasing

the facilities and capacity of Astral Foods. However, this Astral investment pre-dates the Poultry

Master Plan.

WHAT ABOUT THE SMALL FARMERS?

• The contract growers are hampered by the fact that they can only sell their production to the

  existing large companies, which limits their participation in the industry and prevents any

  meaningful ownership or independent growth.

• We have been unable to confirm the existence or operating methodology of the black

  hatchery owner, the 50 contract growers, the independent producers or the bursary holders.

WHAT HAVE WE CONCLUDED ABOUT ASTRAL?

The extra 3 600 jobs are to handle increased capacity in Astral’s production, which further increases Astral’s grip on the industry.

THE POULTRY INDUSTRY?

• While we congratulate SAPA on these efforts, which show that large poultry producers are very far away from struggling, we are also skeptical whether they are truly as altruistic as SAPA makes them sound.

• From analyzing the numbers, it appears that the poultry industry has invested a lot of money in keeping a grip on the monopoly of the five large poultry producers, which is against the spirit of the Poultry Master Plan and confirms the information we have received from AFASA. It is also concerning that SAPA claims to be assisting emerging farmers but then refuses to divulge who these emerging farmers are.

WHY IS SAPA SO SECRETIVE?

• In the light of receiving very little confirmation or further information from SAPA, we are forced to conclude that SAPA – which represents the interests of the five large companies that currently dominate the discourse around the sector – is intent on protecting their monopoly against transformation.

• We invite them, sincerely, to provide information that proves otherwise.

 

Fact Sheet