Rainbow CEO Marthinus Stander used the company announcement to further his argument that cheaper chicken results from the economies of scale of South Africa’s large poultry producers.
“Bigger is better”, he told investors after the results presentation, News24reported.
Stander has argued consistently that large-scale integrated producers are essential to keeping retail chicken prices down. Integrated businesses range from feed and chick production to growing and processing chicken for the market.
This comes in response to an investigation by South Africa’s Competition Commission into whether the industry’s concentrated, integrated structure stifles competition. There has been speculation that the commission may recommend the breakup of the largest poultry producers.
The poultry industry’s aim should be to produce the cheapest products for local consumers, and breaking up big businesses would not serve this purpose, Stander told investors.
Speaking to News24 after the webcast, Stander said the large businesses operated on remarkably small profit margins, and it was even more difficult for small-scale poultry farmers.
He said small-scale farmers wouldn’t be able to sustain themselves without large poultry players who provide day-old chicks and feed to them.
“The big players [on the other hand] will never be able to go into the really rural places and operate there, and there’s the place for the smaller guys, but you need big to have small.”
Stander said Rainbow was standing by to interact with the government over the competition inquiry.
