Transforming South Africa’s Poultry Industry: Challenges and Opportunities
South Africa’s poultry sector faces a critical crossroads, grappling with the limitations of its heavy reliance on low-margin Individually Quick Frozen (IQF) products. These mixed chicken portions, comprising 70–75% of local production, cater primarily to low-income consumers but yield minimal profits for producers, stifling growth and innovation.
Experts argue that shifting towards higher-value products is essential for the industry’s sustainability and profitability.
Unlocking Growth Through Value-Added Products
Dr. Gustav Brink, a mercantile law lecturer and anti-dumping expert at the University of Pretoria, advocates for innovation within the poultry sector. “The industry must pivot to value-added products to ensure its long-term sustainability,” Brink explained.
He highlighted the success of initiatives like Astral’s canned chicken with gravy, suggesting the production of ready-made meals, canned chicken options, and premium items like deboned, skinless chicken breasts or pre-cooked meals as profitable alternatives. “By tapping into higher-margin markets, South African producers can reduce their dependence on low-cost goods,” he noted.
Overcoming Trade Barriers
Trade restrictions and export challenges pose additional hurdles to the poultry industry. Brink emphasized the need for regulatory alignment to enhance South Africa’s global competitiveness.
One key issue is brining, a process where poultry is injected with saltwater to boost weight and flavor. While international standards cap brining at 8%, South African producers often use up to 15%, creating a disadvantage in global markets.
“If we align with international standards, we could export chicken breasts to the EU while importing leg quarters, balancing market demands and addressing local preferences for dark meat cuts like thighs and drumsticks,” Brink explained.
Improved trade diplomacy and predictable policies are also vital for reducing tensions over anti-dumping duties and import quotas that limit export opportunities.
Tackling Bureaucratic Inefficiencies
Inefficiencies within the International Trade Administration Commission (ITAC) further hinder progress, according to Brink. He criticized the commission for failing to meet the World Trade Organization’s (WTO) 12-month deadline for anti-dumping investigations, with some cases dragging on for years.
“ITAC needs a complete overhaul,” Brink said, recommending modernized systems, digitized processes, and standardized procedures to improve efficiency and restore trust. He also called for updates to South Africa’s outdated trade remedies legislation, which has not been reviewed in over two decades.
Balancing Import Tariffs
The debate over import tariffs continues to divide stakeholders. While tariffs protect local producers from international competition, they also contribute to higher poultry prices.
A 2022 Reserve Bank study found that removing tariffs could lower poultry prices by 10–12%, but Brink cautioned against such a move. “Removing protections entirely would devastate local producers, leading to job losses and business closures. A balanced approach is needed to encourage innovation while maintaining industry stability,” he said.
New Entrants Driving Change
Despite these challenges, the rise of new players, particularly Black Economic Empowerment (BEE) initiatives, is reshaping the market. Smaller producers, often more agile and innovative than larger firms, are reinvesting profits and driving efficiencies that benefit the broader sector.
“Smaller firms bring fresh competition, reinvest in their operations, and aren’t weighed down by high overhead costs,” Brink observed. He emphasized the importance of providing better training and financial support for emerging farmers, particularly those participating in land redistribution programs.
A Path Forward
Transitioning from low-margin products to value-added offerings could transform South Africa’s poultry industry, boosting profitability and reducing reliance on government support. Achieving this requires:
- Regulatory Reform: Streamlining ITAC processes, updating trade legislation, and aligning with international standards.
- Strategic Investment: Developing infrastructure and fostering innovation to produce high-value products.
- Empowering New Entrants: Offering training and financial assistance to emerging producers, ensuring broader market participation.
At the same time, domestic concerns like consumer affordability and equitable opportunities for small-scale farmers must remain central to reforms.
“With the right strategies, the poultry sector can drive economic growth, create jobs, and meet the nutritional needs of millions,” Brink concluded.
