anti dumping duties south africa december 2011 poultry

anti dumping duties south africa december 2011 poultry

Total broiler production for 2010 amounted to 969 million broilers or 1.3 million tons of meat, four per cent more than the 931 million broilers or 1.25 million tons of meat produced in 2009, according to the latest GAIN report from USDA Foreign Agricultural Service. In 2011, broiler production is expected to reach 980 million broilers or 1.315 million tons of meat, representing a one per cent increase from 2010.

Executive Summary

The South African poultry meat industry, with a gross value of more than 23 billion rand (ZAR; US$3.2 billion), is the country’s largest individual agricultural industry and contributes almost 18 per cent to agriculture’s Gross Domestic Product. Since 2000, broiler production in South Africa has grown by an average of four per cent per annum. The broiler industry on average produced 18.6 million broilers per week in 2010. This was four per cent more than the 17.8 million broilers per week produced in 2009. Total broiler production for 2010 amounted to 969 million broilers or 1.3 million tons of meat. In 2011, growth is expected to slow to a 1.1 per cent increase in broiler production on the back of high feed prices and a relative strong rand which supports imports. Average weekly broiler production is expected to increase to 18.7 million, while total birds slaughtered in 2011 are expected to reach 980 million broilers or 1.315 million tons of meat.

In 2010, broiler meat demand increased by almost four per cent, in line with positive economic growth in South Africa. The South African per-capita consumption of broiler meat in 2010 was 32kg. FAS expects that broiler meat demand will increase by about five per cent in 2011 as the South African economy is expected to show steady growth.

Broiler meat imports into South Africa are primarily exchange rate driven. Broiler meat imports increased in 2010 by 17 per cent to reach 240,182 tons or US$210 million. Imports of broiler meat accelerated in 2010 with a 15 per cent increase in the value of the Rand to an average of ZAR7.32 to the US$ compared to the ZAR8.43 in 2009. The strong Rand is continuing through 2011 and broiler meat imports are expected to reach almost 300,000 tons in 2011 or 20 per cent of local production.

Brazil is the leading supplier of broiler meat to South Africa, having more than 74 per cent of the import market. However, the South African poultry industry requested that anti-dumping duties against Brazil be introduced. The International Trade Administration Commission (ITAC) agreed to investigate the imports of Brazilian whole birds and boneless cuts. The preliminary findings will likely be issued in the first few months of 2012 by ITAC. The South African Poultry Industry remains confident that anti-dumping actions against Brazil will be introduced. The current five-year anti-dumping duty on chicken meat portions imported from the United States expires in November 2011, but as a Sunset Review has been initiated and the protections will continue until such time as the Sunset Review is complete.

US$1 = ZAR7.40 (on 15 September 2011)
Production

The South African poultry meat industry, with a gross value of more than ZAR23 billion (US$3 billion), is the country’s largest individual agricultural industry and is contributing almost 18 per cent to Agriculture’s Gross Domestic Product. Broiler production makes up most of the poultry industry. Although South Africa produces less than 1.5 per cent of the world’s broiler meat it is the major broiler producer, with almost 80 per cent of total broiler production, in the Southern African Development Community (SADC). Since 2000, broiler production in South Africa has grown by an average of four per cent per annum. However, in 2009, the growth rate slowed to less than one per cent as a result of high commodity prices, which resulted in high feed prices, and was followed by the worldwide economic recession, characterised by high inflation and interest rates, a slow-down in consumer demand and job losses. Fortunately, the South African economy recovered in 2010 from the recession and domestic demand for poultry products increased again. As a result the productions of broilers meat increased by four per cent in 2010.

On average, the broiler industry produced 18.6 million broilers per week in 2010. This was 716,000 broilers per week or four per cent more than the 17.8 million broilers produced in 2009. Total broiler production for 2010 amounted to 969 million broilers or 1.3 million tons of meat. Total broiler production in 2010 was four per cent more than the 931 million broilers or 1.25 million tons of meat produced in 2009.

In 2011, only a 1.1 per cent increase in broiler production is foreseen as feed prices remain high and the relative strong rand/dollar exchange rate which support imports. The average weekly broiler production is expected to increase to 18.7 million, while total birds slaughtered in 2011 is expected to reach 980 million broilers or 1.315 million tons of meat.
Structure


The broiler industry in South Africa is dominated by two large producers, namely Rainbow and Astral. Together, these two companies produce 46 per cent of total broiler production in South Africa. Rainbow, on average, produces 4.4 million broilers per week and Astral, on average, 4.0 million broilers per week. The third largest producer, Country Bird, produces 1.3 million broilers per week or seven per cent of total broiler production in South Africa. Country Bird is followed by four medium-sized producers – producing more than 800,000 broilers per week – that supply 20 per cent of the market. These seven companies provide 73 per cent of the broilers, while hundreds of smaller producers supply the balance. A degree of consolidation has taken place in recent years, with bigger players buying up some of the smaller producers.
Feed cost

Feed cost is one of the major cost factors in the broiler industry. The broiler industry suffered dramatic feed price increases in 2008 (from ZAR2,648 per ton to ZAR3,502 or a 32 per cent increase), due to the significant increase in the prices of corn and soybeans, the main raw materials in broiler feed. In 2009, feed prices decreased to an average price of ZAR3,326 per ton but were still significantly higher than historical levels.

The increases in feed cost prices were not recovered by sales realisation, putting the profit margin of companies in the broiler industry under severe pressure. However, with the second largest corn crop ever recorded in South Africa and a record soya bean crop, the average broiler feed price decreased in 2010 to ZAR3,000 per ton. This represented a decrease of 10 per cent compared to 2009.

Corn is the major ingredient (more than 50 per cent) in broiler feed and any change in the price of corn directly impacts the profit margin of broiler producers. The poultry industry consumes approximately 2.8 million tons of corn – mainly yellow corn – or 30 per cent of total corn consumption in South Africa on an annual basis. Another important product in the 3.96 million tons of feed (72 per cent of all feed manufactured in South Africa annually) consumed by the poultry industry is soybean meal, which is mainly imported from Argentina.
Animal health and diseases

The broiler industry in South Africa has become largely resilient in disease situations. The past few years have seen a strong emphasis on precautionary measures, disease surveillance and control in the South African broiler industry. The aim is to reduce the incidence of animal disease and minimise the impact of outbreaks when they do occur. The South African poultry industry also funded a long-term disease-reduction programme, which is in the final planning and approval stages and should be rolled out during the next three years.

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