In the latest edition of SAPA’s official Poultry Bulletin, Breitenbach took issue with the Competition Commission’s market inquiry into the structure of the poultry industry. He said the commission believes that the industry is dominated by a few large vertically integrated companies, and that there are market features within the industry that impede or distort competition.
“It is indeed so that the South African industry is highly concentrated and integrated, which is not a result of nefarious practices, but a symptom of a mature industry.
“South Africa’s poultry industry is not dissimilar to its counterparts in Europe, the United States and Brazil. In Brazil, for instance, two companies, BRF and JBS, dominate poultry production and account for around 70% of all poultry for export and half of all slaughtering. In the US Tyson Foods and Pilgrim’s Pride have a combined market share of almost 50%. Tyson alone produced 47 million chickens per week in 2022.”
Breitenbach said South African poultry producers had to compete with these huge international companies that export to South Africa at such volumes that imports are the second biggest “producer” of chicken in the country.
“Poultry companies make paper-thin margins and were in a loss situation in 2023, widely seen as the worst year ever to have been a poultry farmer in South Africa. The integrated companies saw significant losses, and hundreds, if not thousands of smaller producers were simply forced to close their doors,” he said.
“When even the country’s largest producer shows a financial loss for the first time in its 23-year history, you know the industry is in trouble.”
Breitenbach said poultry farming is a difficult business to get right, if you want to scale up to commercial production.
“You are very much on your own, and best you ensure your own feed sources, water and electricity supply and other inputs so that economies of scale may enable your survival. Not everyone can afford to do that, but the solution is not to punish those who do.”
Breitenbach said poultry producers would co-operate with the competition investigation.
“We believe any scrutiny of the industry will serve to confirm what Wageningen University in the Netherlands has found year after year – that South Africa’s producers are globally competitive,” he stated.
