Market Analysis

A recent Poultry Market Analysis shows that South Africa’s poultry industry saw growth in Q4 2024 despite economic challenges:

• Astral Foods demonstrated a significant recovery, marked by increased revenue and profitability.
• RCL Foods (Rainbow Chicken) enhanced its profitability and liquidity through strategic acquisitions and improvements in supply chain efficiencies.

 

Meanwhile, Astral Foods and RCL Foods are among the top 50 producers in the world, according to annual rankings produced by WATTPoultry International.

The rankings are determined by the number of birds processed annually. Astral holds the 38th position globally, processing 260 million birds, while RCL is ranked 49th with 202 million birds.

South African companies dominate the top 50 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.

 

Latest Trade Statistics on Poultry Imports

 In 2024, chicken imports showed mixed trends compared to 2023.

• Mechanically deboned meat (MDM) increased by 6%, averaging 19,910 metric tons (MT) per month.
• Chicken offal imports increased by 9%, averaging 7,805 MT.
• Bone-in cuts saw a sharp decline of 44%, dropping to 3,243 MT.
• Boneless chicken imports fell slightly by 4% to 202 MT.
• Overall, total chicken imports excluding MDM decreased by 8%, averaging 13,201 MT per month.

 

Poultry Industry Outlook 2025

The United Stated Department of Agriculture, USDA, forecasts that chicken meat production will increase by 3% to 1.65 million tons in Marketing Year (MY) 2025 as a result of a strengthening domestic sector.

Production is estimated to increase by 6% to 1.59 million tons as the industry has rebounded from the 2023 Highly Pathogenic Avian Influenza (HPAI) outbreak.

Decreasing food inflation and softening poultry prices are projected to boost domestic consumption of chicken meat, which is expected to increase by 2% to 1.88 million tons in 2025.

Imports are projected to decrease by a further 6% in 2025 to 300,000 tons, due to heightened domestic production and decreased competitiveness of imported product due to high tariffs and anti-dumping duties.

Chicken meat exports are predicted to rise by 8% to 70,000 tons in 2025, with poultry remaining a preferred protein for major markets. South Africa primarily exports to Southern Africa.

 

Bird Flu Vaccinations

The poultry industry is urgently appealing to the government to consider easing biosecurity protocols for approved HPAI vaccines in order to alleviate the impact of bird flu outbreaks.

With no government compensation for culling chicken flocks, farmers consider vaccination the only realistic solution to bird flu outbreaks.

The vaccination rollout has encountered delays due to farmers’ inability to comply with the stringent biosecurity protocols set by the Department of Agriculture, Land Reform and Rural Development (DALRRD).

SAPA has expressed concerns, indicating that the government has made the process of accessing vaccines unnecessarily onerous. “Monitoring and testing requirements are so restrictive and expensive, that farmers cannot comply.”

DALRRD Deputy Director-General (DDG) of Agricultural Production, Biosecurity, and Disaster Management, Dipepeneneng Serage, recently told ChickenFacts that the inability to comply with biosecurity protocols indicates a broader failure in industry standards rather than a flaw in the regulations.

“The reason why we have recurring outbreaks is because SAPPA’s biosecurity status is poor. We wouldn’t be having these outbreaks if SAPA’s biosecurity was in check.”

Serage added, “It’s concerning to hear claims of being unable to ensure biosecurity. If you can’t secure your farm, perhaps you should reconsider farming. The Animal Diseases Act, specifically Section 11, mandates that all farmers must prevent their farms from being infected by animal diseases. It’s a legal requirement. So, if you tell me you can’t comply with the law, what can we do?”

 

Exporting Premium Cuts: Missed Opportunity?

A Broiler Value Chain Competitiveness Report released by BFAP in 2017 indicates that South Africa’s poultry industry mainly addresses more accessible opportunities with a narrow focus on the domestic market and neighbouring countries.

When considering the composition and origin of imports, the production cost analysis showed that higher production costs alone do not solely explain the rise in imports, raising questions related to marketing.

Most import growth in the five years preceding 2017 was due to bone-in portions from the EU, where production costs were higher than in South Africa.

Unlike the EU, where consumers prefer and pay more for chicken breasts, the South African market is dominated by IQF pieces. Producers in the EU and the USA can supply bone-in portions to the South African market at competitive prices while remaining profitable, as they obtain a premium domestically for higher value cuts.

Domestic producers face challenges competing at these prices because they do not receive a premium for parts of the carcass.

The report recommended that producers explore the potential for obtaining a premium for higher value cuts in selected export markets or consider adopting a more value-added approach so that their products do not directly compete with these imported cuts.

According to SAPA, progress has been made in opening export markets.

Residue monitoring programmes have been submitted, with UK and Saudi Arabia inspections expected soon. These are key steps for accessing the UK, EU, and Saudi Arabian markets, particularly for cooked chicken products like breast meat.

SAPA states, however, that export of uncooked chicken is not anticipated at this stage.

 

Bilateral Trade Relations

Another aspect of the discussion on vaccines involves trade barriers related to poultry.

Most countries, including the USA, do not recognise countries that vaccinate as free of bird flu because vaccines can mask the presence of the disease. Consequently, these countries do not accept exports from nations that vaccinate their poultry.

South Africa’s Poultry Master Plan emphasises the expansion of exports. However, the vaccination of chickens could substantially limit export opportunities beyond Africa, again underscoring the industry’s narrow focus on the domestic market and neighbouring countries.

 It is worth noting that the poultry industry’s reluctance to expand its trade opportunities beyond Africa highlights the fundamental solution to the contentious relationship between local producers and poultry imports. This hesitation also contributes to the resulting imbalance and lack of healthy competition in the market.

Local producers have secured a substantial share of the poultry market, while the broader economy and consumers bear the cost.

Another noteworthy comment is the lack of development of emerging poultry producers. While local producers appoint contract growers, there is still no material proof of emerging producers that was developed into individual successful production capacity.

 

Conclusion

The South African poultry industry is quick to bemoan economic challenges and threats such as bird flu, yet it has demonstrated remarkable resilience and recovery, particularly following the 2023 Avian Influenza outbreak. Top poultry producers like Rainbow Chicken and Astral Foods reported substantial revenue growth of 7.9% and 6.4% respectively in 2024.

However, the industry’s limited focus on the domestic market and neighbouring countries restricts its growth potential. Expanding into global markets would not only level the playing field but also introduce greater potential for market expansion and sustainability.

Additionally, anti-dumping duties have all but eliminated market competition, leading to an artificial market which ultimately stifles opportunity for market growth, sustainable development and competitively priced chicken products.

Children under the age of 5 in lower income households in South Africa experience extremely high rates of malnutrition and growth stunting due to lack of protein. Removing import tariffs and duties on certain chicken products, such as offals, would be a major step towards providing these households with better access to affordable protein and supporting economic participation by addressing these developmental challenges.

Summarily, while the industry has shown significant strength and adaptability, embracing a more global perspective will ensure sustained growth and better outcomes for all stakeholders involved.