Are you chicken?

Chicken is the most consumed animal protein in South Africa. South Africans consume approximately 23 million chickens a week. Of that number, 19 million are locally farmed. South Africans consume more chicken than any other meat: 49% of animal protein consumed per person is poultry, 26% is beef, 13% is eggs (still chicken in my opinion), 7% is pork and 5% is mutton and goat. The South African poultry industry is a cornerstone of the nation's agricultural sector, contributing significantly to food security and employment. In 2020, poultry production accounted for 18% of the total agricultural gross value and 41% of animal product gross value, with the industry providing direct and indirect employment to over 110,000 people.

In 2025, chicken meat production is forecasted to increase by 3% to 1.65 million tons, driven by a strengthening domestic sector. Domestic consumption of chicken meat is expected to rise by 2% to 1.88 million tons in 2025, attributed to improved consumer spending power and decreased food inflation.

The industry is dominated by a few large-scale producers, with the top five companies accounting for approximately 70% of total chicken production. Notably, RCL Foods and Astral Foods together hold about 50% of the market share. While the other players all contribute 21%: Country Bird - 9%, Daybreak- 5% (which is government owned), and Sovereign -7% and the balance goes all other small player and a 19% contribution of imports.

Imports have historically played a significant role in the South African poultry market. However, due to anti-dumping duties and high tariffs, imports are projected to decrease by 6% to 300,000 tons in 2025. Despite this decline, imports remain essential for meeting domestic demand, especially for products like mechanically deboned meat (MDM), which are not produced locally. Brazil accounts for 81% of the import volumes, Argentina 8% and the UK and US both contribute 5% each.

The industry has suffered significant short comings potential from frequent power outages have disrupted operations, leading to significant financial losses. Producers have subsequently invested in alternative energy solutions to mitigate this issue. Aging infrastructure has affected transportation and logistics. Collaborative efforts between the industry and government are underway to address these challenges and improve supply chain resilience.

The industry can still make efficiency and cost improvement, which can be achieved through various approaches that target production processes, supply chain management, and technological innovation. The industry has seen improvements in technical efficiency, achieving one of the lowest feed conversion rates globally at 1.45.

Feed typically makes up a large portion of poultry production costs (around 60-70%). Optimising feed formulation to include high-quality but affordable ingredients, and using more local grains, can lead to substantial cost savings. By using technologies like automatic feeders and sensors, farmers can better tailor the diet to the specific needs of the birds, minimising waste and improving growth rates.

• Alternative Feed Ingredients: The use of alternative protein sources (e.g., insect meal, algae, or fermented by-products) can help reduce dependence on traditional, costly feed ingredients like soy and maize.

Genetic Selection

• Selective Breeding: Focusing on genetics can help improve the efficiency of the birds, with particular attention to traits like feed conversion rate (FCR), growth rate, and disease resistance. Poultry breeding programs can lead to birds that require less feed to grow and reach market weight more quickly.
• Hybrid Breeds: Crossbreeding and creating hybrid strains that combine the best traits from different poultry lines can improve overall production efficiency.

Automation and Technology Integration

• Automation: Automation in egg collection, feeding, watering, and even monitoring bird health can reduce labour costs and increase efficiency. Technology can also be used to monitor and predict bird behaviour and health, optimising care and preventing disease outbreaks, which have been rife in the South African market recently.
• Climate Control and Sensors: Using sensors and smart climate control systems can optimise environmental conditions for poultry, reducing energy consumption while maintaining healthy conditions for the birds.
• Data Analytics: Real-time data collection on growth, feed conversion, and environmental conditions can be analysed to improve decision-making and track performance metrics across the farm.

Disease Management and Biosecurity

• Vaccination Programs: Effective vaccination programs can prevent costly outbreaks of diseases like avian flu, Newcastle disease, or infectious bronchitis, which can disrupt production and lead to large financial losses.
• Biosecurity Measures: Ensuring strict biosecurity measures can reduce the risk of disease transmission, especially with the movement of birds or feed. This can involve farm sanitation protocols, restricting access to poultry farms, and controlling the movement of equipment and personnel.

Energy Efficiency

• Renewable Energy: The use of solar panels or biogas can help reduce energy costs on poultry farms. Given the high energy demands of poultry farming, especially in the case of heating and lighting, these energy-efficient technologies can provide long-term savings.
• Optimised Lighting: Using energy-efficient lighting systems and adjusting lighting schedules to improve bird performance and reduce energy consumption can contribute to lower operating costs.

Waste Management and Sustainability

• Manure Management: Poultry manure is an excellent source of fertilizer. By developing better systems for manure handling and converting waste into compost or biogas, producers can not only reduce disposal costs but also create additional revenue streams.
• Water Recycling: Poultry operations can significantly benefit from water recycling systems that reduce water use and lower costs, especially in regions where water is scarce.

Supply Chain Optimisation

• Local Sourcing: Sourcing inputs like feed and chicks locally, rather than importing, can reduce transportation costs and risks associated with supply chain disruptions.
• Cold Chain Efficiency: Optimising the cold chain for meat and eggs is vital to maintaining quality and reducing losses. More investment in cold storage infrastructure, refrigerated transport, and better logistics management can prevent spoilage and improve overall supply chain efficiency.
• Transport and Distribution: Streamlining logistics, reducing transportation costs, and implementing Just-in-Time (JIT) practices can enhance efficiency in getting products to market.

Financing and Government Support

• Access to Capital: Poultry producers can benefit from government subsidies, loans, or other forms of financial assistance that promote technological adoption and innovation. Financing support can help with upgrading infrastructure, investing in automation, or expanding production capacity.
• Policy Support: Governments can help improve the efficiency of the poultry industry by implementing favourable policies that support innovation, reduce trade barriers, and encourage investment in the sector. They can also promote sustainability initiatives like waste-to-energy projects.

Export Market Development

• Diversification of Markets: Expanding into regional and international markets (e.g., the African continent, Asia, or the Middle East) can help poultry producers achieve economies of scale. Exporting can improve profitability by accessing higher-value markets for poultry products.
• Product Differentiation: Producing value-added products like processed meats, ready-to-cook meals, or organic poultry can provide higher margins than selling live birds or basic cuts.

Collaboration and Training

• Industry Associations: Collaboration between stakeholders in the industry (farmers, feed producers, processors, etc.) can promote shared resources, best practices, and joint initiatives for reducing costs and improving production methods.
• Training Programs: Providing training for farm workers in advanced farming techniques, disease prevention, and efficient resource management can reduce inefficiencies and lead to better overall performance.

By focusing on these areas, the Southern African poultry industry can significantly improve its efficiency, reduce costs, and maintain competitiveness in the global market. The integration of modern technologies and sustainable practices will not only help reduce costs but also contribute to the long-term growth and resilience of the industry.

Mahumoscm.co.za @mahumops @mahumoscm #supplychain #SupplychainManagement #logistics #logisticsmanagement #biosecurity #biofuel #optimisation RCL FOODS @astralfoods quantumfoods @countrybird Alzu Enterprises @daybreakfarms Rossouw Meat AFGRI Eggbert Eggs (Pty) Ltd