The South African poultry industry is valued at R65 billion, making it the second-largest agricultural sector and the largest employer within agriculture, supporting nearly 58,000 jobs.

Despite soaring profits in 2024, producers lament ongoing challenges with production costs and competition from declining poultry imports.

Major producers like Rainbow Chicken and Astral Foods reported substantial revenue growth of 7.9% and 6.4% respectively in 2024, demonstrating remarkable resilience following the 2023 Avian Influenza outbreak.

Moreover, South African companies dominate the top 10 rankings in Africa. Astral and RCL take the first and second positions, respectively. Country Bird ranks fourth with 74 million birds, followed by Sovereign in fifth place with 70 million, Daybreak in seventh with 50 million, and Quantum Foods in eighth with 44.7 million.

In February 2024, the South African Competition Commission initiated a Poultry Market Enquiry (PMI) due to concerns that certain characteristics of the poultry market may hinder, distort, or limit competition.

In the PMI announcement, Chief Economist James Hodge stated, “A poultry market inquiry into the concentrated and integrated structure of the industry can complement other initiatives to improve the competitiveness of the industry to the benefit of consumers and smaller participants.”

The PMI should be completed within 18 months of the final Terms of Reference, with release anticipated in the second half of 2025.

In the meantime, ChickenFacts investigates both industry challenges and the necessary reforms required to support sustainable growth and fair competition for industry stakeholders and consumers who depend on affordable chicken as a primary protein source.

 

Poultry Industry and Economic Challenges

 

Production Costs

• Feed costs are a significant burden, as poultry feed accounts for 60-70% of total production costs. South Africa relies on imported soy and maize, making feed prices volatile.
• Energy costs have also seen substantial increases. On 1 April 2025, the average standard tariff for Eskom increased to 220.92c/kWh, marking a 12.74% rise. By 2027, this will further increase to 247.16c/kWh.
• Since April 2020, electricity prices have surged from 110.93c/kWh, effectively doubling the financial strain on consumers and businesses.
• Labour costs in South Africa are relatively high compared to major exporting nations.
• Compliance with domestic food safety regulations, biosecurity measures, and infrastructure investments provide additional financial implications.

 

Impact of Bird Flu Outbreaks

Avian influenza (HPAI) remains a persistent threat to poultry producers worldwide. However, its impact is particularly pronounced on local farmers who lack the resilience of major exporters.

The 2023 outbreak led to the culling of over 8 million birds, significantly reducing domestic supply.

Future outbreaks of Highly Pathogenic Avian Influenza (HPAI) and poultry farms working to comply with biosecurity protocols established by the DALRRD (Department of Agriculture, Land Reform and Rural Development) for vaccination safety and effectiveness add financial challenges for the local industry, impeding its ability to compete on a global scale.

 

Export Barriers for Local Producers

Local producers are reluctant to access international export markets. Trade regulations are stringent in many international markets, imposing strict food safety and quality standards that make compliance expensive for producers.

Additionally, weak export logistics and the absence of strategic trade agreements restrict local producers from accessing lucrative foreign markets.

However, the industry’s narrow focus on the domestic market and neighbouring countries limits its growth potential.

The poultry industry’s hesitation to expand trade outside of Africa highlights the tension between local producers and imports. Global competition would boost revenue, reduce dependence on African markets, and support bilateral trade to sustain and grow the industry.

This hesitancy also contributes to the local market imbalance and hinders healthy competition.

Given the current geopolitical climate and increased import tariffs imposed by former President Trump, South Africa faces a significant economic imperative: achieve global competitiveness or risk falling behind.

 

Lack of Support for Emerging Producers

Small and emerging poultry producers experience unique challenges that hinder their ability to compete.

They have limited access to financing, which makes it difficult to secure funds for farm infrastructure, expansion, and innovation.

Additionally, restricted market entry due to dominance by large, established producers makes it challenging for smaller producers to gain market share.

Moreover, policy gaps mean that government initiatives, while present, are often insufficient in addressing long-term sustainability and capacity-building for emerging farmers.

Without targeted investment and policy support, local emerging poultry producers cannot scale up to match competitors.

 

Path to a Balanced Market

Implementing significant and identifiable changes is essential for establishing a sustainable poultry industry where local producers and imports can coexist beneficially.

Understanding the necessary actions is a critical step toward success.

 

Lower Production Costs

To achieve lower production costs, investment in local feed production, support for emerging feed farmers, renewable energy, and efficient farming practices is key. These investments will enable domestic producers to achieve cost parity with international exporters, thereby improving their competitive edge.

 

Disease Control

Improving disease control is a critical area. Strengthening biosecurity measures and establishing rapid response frameworks for bird flu outbreaks will reduce supply disruptions that can significantly impact the poultry industry.

 

Reforming of Trade Policies

In 2020, the government raised the general Most-Favoured-Nation (MFN) duties on poultry imports to support local producers in expanding production and focusing on exports. The duty on bone-in poultry increased from 37% to 62%, while the duty on boneless poultry rose from 12% to 42%.

While these measures aim to protect local producers, higher tariffs often lead to increased chicken prices, reducing affordability for consumers who rely on affordable poultry as a staple protein source.

When local producers lack efficiency or cost competitiveness, import duties only create artificial protection rather than addressing underlying industry challenges.

This lack of competition has allowed local producers to dominate the market, potentially leading to higher prices and reduced consumer choice.

A monopolised market also disincentivises producers from investing in innovative and advanced methods of reducing production costs.

To adjust import tariffs is necessary to find a balance between protectionism and competition. This balance will benefit both producers and consumers by ensuring fair pricing, market stability and uninterrupted value chains.

 

Poultry Exports

Enhancing export capabilities involves establishing robust trade agreements, upgrading logistics, and improving compliance with global standards. These actions will open foreign markets for local poultry products, providing new growth opportunities for the industry.

 

Emerging Poultry Farmers

Support for emerging farmers needs to be expanded through increased financial access, comprehensive training programmes, and significant infrastructure investment. These measures will ensure inclusive growth for small producers and help them overcome barriers to market entry.

 

Conclusion

While the solutions are complex and will require substantial changes in both government and private sector policies, as well as significant industry investment, the poultry industry model requires urgent transformation, presenting an opportune moment for advancement.

Ultimately, a balanced poultry market requires efficiency-driven local production, competitive pricing for consumers by means of bilateral trade, and expanded global trade opportunities.

By addressing structural challenges rather than relying solely on import duties, stakeholders can foster a sustainable industry that benefits both domestic and international participants, as well as consumers who would ultimately benefit from competitively priced chicken.