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SA Poultry Industry Crisis Impact on the Value Chain FEED, GRAIN & OILSEED

SA Poultry Industry Crisis Impact on the Value Chain FEED, GRAIN & OILSEED. Parliament: Portfolio Committee on Trade & Industry 2 May 2017. OUTLINE :. ANIMAL PROTEIN – VALUE CHAIN & AFMA PRICE MECHANISMS (PARITY) MAIZE & OILSEED PERSPECTIVE IMPACT ON FEED INDUSTRY / FEED COSTING DYNAMICS

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SA Poultry Industry Crisis Impact on the Value Chain FEED, GRAIN & OILSEED

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  1. SA Poultry Industry CrisisImpact on the Value ChainFEED, GRAIN & OILSEED Parliament: Portfolio Committee on Trade & Industry 2 May 2017

  2. OUTLINE: • ANIMAL PROTEIN – VALUE CHAIN & AFMA • PRICE MECHANISMS (PARITY) • MAIZE & OILSEED PERSPECTIVE • IMPACT ON FEED INDUSTRY / FEED COSTING DYNAMICS • IMPACT ON GRAIN VALUE CHAIN • POTENTIAL FOR FEED, GRAINS & OILSEEDS • POSSIBLE MECHANISMS / INTERVENTIONS • CONCLUSION

  3. Animal Protein Value Chain SEED, FERTILIZER, PESTICIDE. (SANSOR) PRODUCTION (PRIMARY AGRIC, MAIZE, ETC) STORAGE (AGBIZ GRAIN) LABOUR AND ROAD TRANSPORT VERY IMPORTANT CONTRIBUTORS THROUGHOUT THE WHOLE VALUE CHAIN TRADE (SACOTA) TRANSPORT (RFA) ANIMAL FEED (AFMA) PRODUCER (SAPA - POULTRY) PROCESSOR (SAPA - POULTRY) RETAIL (CGCSA) CONSUMER (SANCU)

  4. Introduction – VC (Value Chain) - Maize 2015/16 PROCESSING PROCESSOR (SAPA) ANIMAL FEED (AFMA) HUMAN (NCM) RETAIL (CGCSA) PRODUCER (SAPA) CONSUMER (SANCU) 4 696 115 Ton 5 520 289 Ton 10 246 668 Ton RETAIL (CGCSA) CONSUMER (SANCU)

  5. Introduction – AFMA (Cont.) NATIONAL FEED VOLUMES – 2015/16 ●AFMA members: ± 7.2 mil tons - 61% ●SA Feedlots (B & S) : ± 2.2 mil tons - 19% ●Pig Producers: ± 0.6 mil tons - 5% ●Dairy Farmers: ± 1.1 mil tons - 9% ●Other manufacturers: ± 0.6 mil tons - 6% ► Gross Turnover Value of +/- R 50 Billion

  6. AFMA – ANIMAL FEED MANUFACTURERS ASSOCIATION ● Represents formal animal feed industry since 1945. ● Art 21 Company, voluntary – membership levy. ● 152 Members. 71 Feed Manufacturers 81 Input suppliers

  7. Introduction – AFMA (Cont.)

  8. Price Mechanism – Parity Prices

  9. Price Mechanism – Parity Prices

  10. SA Maize Competitiveness - CBOT

  11. Price Mechanism – Parity Prices

  12. SA Soya Competitiveness - CBOT

  13. Yields per commodity – Ton/ha

  14. Price Comparison – Maize & SBM 62% of Broiler Diet 24.3% of Broiler Diet

  15. Broiler Feed Cost & Price Dynamics • MAIZE = 62% INCLUSION • SOYA = 24.3% INCLUSION • MAIZE & SOY = 67% OF RAW MAT COST • TOT. RAW MAT COST = 92-95% OF PROD. COST • THUS – GLOBAL FEED PRICES DRIVEN BY RAW MAT COST

  16. Feed Cost & Price Comparison

  17. Potential – Maize Production

  18. Potential – Soy Production

  19. Potential – Soy Production

  20. Impact of Poultry Imports 80% 26% of Local Market 80%

  21. Impact of Poultry Imports (Cont.) DIRECT 250 000 Tons 7.3%

  22. Impact of Poultry Imports (Cont.) FEED VOLUMES & EMPLOYMENT LOST

  23. Impact of Poultry Imports (Cont.) LOST OPPORTUNITY OTHER - 78 000 ton Feed MDM - 780 000 ton Feed BIP - 1.3 mil ton Feed

  24. Impact of Poultry Imports (Cont.) IMMEDIATE RISK TO THE FEED INDUSTRTY • ONLY FRESH MARKET TO SURVIFE • BROILER FEED VOLUMES REDUCED BY 3 MILLION TONS • CLOSURE OF 31 FEED MILLS • 4 650 DIRECT JOBS TO BE LOST • 1.9 MILLION TON OF MAIZE NOT TO BE USED • 730 000 TON SBM NOT TO BE USED – KILLING OF SOYA INDUSTRY

  25. Mechanisms & Conclusion • BROILER INDUSTRY NEGATIVELY EFFECTED BY DROUGHT AND DUMPING • WTO RANGE OF INSTRUMENTS FOR PROTECTION • NOT ONLY TRADE REMEDIES / ANIMAL HEALTH • SAME TREATMENT FOR IMPORTS as for EXPORTS • MARKET GROWTH and EXPORT DEVELOPMENT • INTERVENTIONS ON POULTRY and COMMODITIES • INTERVENTIONS – VALUE CHAIN APPROACH

  26. THANK YOU !!

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