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Roadmap to a transformed poultry industry

Pillar 1 of the poultry industry masterplan – Expanding and Improving Production – pays much attention to empowerment and transformation. The measures required include expanding and improving the contract grower sector, enhancing skills in the industry, increased support for independent farmers and higher levels of black empowerment and ownership.


The masterplan recognises that transformation is not an overnight event by stating that its targets have to be achieved by 2023. But three years is not a long time to bring about fundamental change. The SA Poultry Association (SAPA) therefore wasted no time in taking stock of existing initiatives and spearheading new ones.


Now, about nine months after the masterplan was signed, a solid transformation story is emerging from the association.


It is important to bear in mind that SAPA’s transformation role has limits, says Willie Bosoga, who chairs the industry body’s transformation committee. “Matters like black ownership of companies are entirely in the hands of the companies themselves, as is the quality and quantity of training they provide to their employees, and the commercial agreements they have with contract growers. It was therefore vital that SAPA members sign the masterplan in their own right. We could not make such commitments on their behalf.”


This limitation aside, SAPA has made significant progress on matters within its remit.


SAPA membership


The association has increased its number of black members from 18 at the start of 2020 to 84 by the middle of July. It has set itself a target of 100 black members by yearend, and is confident that it can be exceeded. “At that point, we will have more black businesses than white businesses as SAPA members,” says Bosoga.


In addition, SAPA’s database currently includes 670 small-scale farmers, ranging from people with 100 chickens in their backyards to those who run more commercially viable and sustainable operations. “We are in regular communication with these farmers,” says Bosoga. “We share technical information and industry news with them in an effort to help them become better farmers and to draw them into the industry fold.”


It is not a one-way street either. SAPA experts field dozens of questions each month from members and non-members alike.


SMME assistance completed


In early 2019, the Department of Land Reform and Rural Development (DLRRD) requested SAPA to provide specific assistance to 19 poultry farmers on the department’s books. SAPA visited the farms to assess the challenges of each and determine what was required.


To date, 15 of the 19 farmers were helped, mostly with business-plan development and finalising environmental impact assessments (EIAs). The SAPA transformation fund foot the bill for these initiatives to the value of R2.1 million.


In addition, and unrelated to the DLRRD beneficiaries, the owner of a hatchery in Limpopo received a R134 000 grant to complete the EIA needed for his expansion project.


In an exciting development, one of the 19 DLRRD farmers recently joined the board of SAPA’s broiler organisation, bringing further diversity to the organisation’s leadership and enriching deliberations with a diverse perspective.


A model to focus assistance


SAPA is keenly aware of the need for assistance among emerging farmers, and that it is not possible for the association to help every applicant. The general managers of the broiler organisation, Izaak Breitenbach, and the egg organisation, Mogala Mamabolo, therefore decided to take a step back and consider SAPA’s approach.


They turned to the small-scale farmer survey that SAPA commissions four times a year for guidance. “We clearly saw that small farmers need help with financing, with inputs, mainly day-old chicks and feed, and with understanding their markets,” says Breitenbach.


As a first step, the two GMs decided to invest resources in developing a model that would increase applicants’ chances of funding success and help SAPA decide how best to apply the resources at its disposal.


The result is a financial model that takes a vast variety of variables into account to determine the economic viability of a proposed broiler or layer project. The model can be applied to green fields and expansion projects alike, and answers questions such as the level of debt the business would be able to sustain, the scale required to be profitable, and the annual return the farmer can expect. In addition, the model produces projected annual financial statements for the next 10 years, a cash flow model and an income statement for the business owner – all the information needed to apply for funding.


“The value of the model is that it puts farmers and bankers on an equal footing by empowering farmers to understand and participate in the funding conversation,” says Mamabolo.


Supporting the model is a protocol for engagement that SAPA has developed and recently started implementing. Any farmer who approaches the association for assistance, has to work through and complete The Southern African Chicken Book. This electronic publication shares detailed information about egg and chicken farming and includes a self-assessment. Based on the outcome of the assessment, the farmer will then work with SAPA’s in-house economist to populate the financial model in preparation for a funding application.


“At first glance it might look like red tape,” says Breitenbach, “but the protocol and the model are critically important to ensure that limited resources go towards the most viable projects.”


Building on the understanding that a successful funding application is merely the start of a potentially successful business, SAPA is busy developing a small-farmer co-management unit. Modelled on the success that the cotton industry has achieved with a similar model, the unit will consist of technical and financial experts who will monitor the small farms under SAPA’s umbrella and step in proactively when needed. In a further show of public-private cooperation, SAPA hopes that the technical experts will be DLRRD extension officers trained to become poultry specialists.


“The co-management model also provides banks with the peace of mind that the enterprises they fund have the best possible chance of succeeding,” says Breitenbach.


A further initiative to ensure success, specifically aimed at preventing the exploitation of small farmers, is the database of accredited suppliers that SAPA completed recently. The idea is that suppliers become SAPA members and, for a nominal fee, can advertise on the association’s website.


Training


Training is a major focus area for SAPA. Having already assisted with training for 270 DLRRD-linked small farmers and 190 abattoir employees in recent years, SAPA recently trained 81 small farmers in biosecurity. The association is currently in negotiations with local animal health company Afrivet to roll out a comprehensive biosecurity audit and training programme to help safeguard the industry against the devastation that diseases such as avian flu can wreak.


Further training programmes in the pipeline include commercial egg production, broiler production, hatchery management, business skills and further abattoir training. SAPA is also looking at developing an e-learning portal.


In addition, the association is coordinating the establishment of a Gauteng-based training facility modelled on the successful KwaZulu-Natal Poultry Institute in Durban.


For future training efforts, SAPA has joined hands with the African Farmers Association of South Africa (AFASA). “Cooperation is critical to ensure we don’t duplicate efforts, and that we share resources and technology to reach as many black farmers as possible,” says Mamabolo.


“We are proud of what we have achieved over the past 18 months,” concludes Bosoga. “The time and effort devoted to developing our models and protocols means that we’ll be able to accomplish much more in future. Transformation is not an end in itself; it is the means to achieve economic growth, the advancement of society as a whole and, perhaps most importantly, enhanced food security in South Africa.”


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