Annual Statistical Reports - SAPA Industry Profile 2011

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Introduction | The Poultry Industry in SA | SADC Overview | International Competitiveness | Day-Old Chick Supply Industry | Egg Industry in SA | Broiler Industry | The DPFO | Major drives in the poultry industry | National Agricultural Strategy (NAS) | Animal Health / Disease | Food Safety & Compliance | Training & Skills Development | Conclusion
Appendix A | Appendix B | Appendix C

1.INTRODUCTION

1.1 History

As one of South Africa’s oldest agricultural organisations, the South African Poultry Association (SAPA) started off in Kimberley in 1904primarily as a body of poultry hobbyists, catering to the needs of the various poultry clubs by regulating the rules and appointing judges for popular poultry shows and egg laying tests staged at the time.
Over the years, the poultry industry evolved from what was essentially a backyard industry with thousands of people keeping small flocks and only a few large producers,to the mature, efficient and highly productive commercial operations we see today.
As the industry changed, so too has SAPA adapted to meet the industry’s changing needs.. The association began a continuous process of identifying issues affecting the industry and taking positive steps to deal with these, including the often contentious matters of area representation, management decentralisation and dispute resolution among producers.
Responding to the needs of its members, SAPA served as the industry’s collective voice to the public and to government. Strengthening its authority, credibility and legitimacy, a South African Poultry Breeders Register was established in 1926, and ten years later, government gave the assurance that it would definitely recognise SAPA as the official representative organisation of the country’s poultry industry.

1.2 Milestones

Since 1904, as the fortunes of the poultry industry changed and a trend emerged of more formal enterprises with modern production processes underpinned by sound commercial practices, SAPA had to dynamically respond to meet the challenges of this increasingly influential agricultural sector.
This necessitated the need for improved controls and comprehensive record keeping, as well as greater cooperation among members to arrive at common objectives, especially in engagements with government and state agencies.

The pivotal role played by SAPA in the development the commercial poultry industry is reflected in the association’s key initiatives that charted the course for modern poultry production. These include the establishment ofa Record of Production Register, which was considered to be of great value at the time. At SAPA’s request, the Egg Control Board was established in 1951, and the association was also instrumental in making modern poultry equipment available when hen batteries were still a new concept.

Trade-wise, SAPA was instrumentalin getting import tariffs approved, in passing the Livestock Improvement Act, influencingbilateral Trade Agreements, and in having GST on livestock removed, followed later by VAT on eggs.
To advance the industry’s knowledge base, the association facilitated the introduction of SAPA, YTA and KZNPI courses, supported advanced veterinary training at the University of Pretoria’s Onderstepoort facility, set up a central reference laboratory, and facilitated the reduction of surcharges on imported breeding material and equipment.

Maintaining its reputation for innovation, in 2009 SAPA introduced the statutory levy, a bold move that created a new primary funding mechanism for the association’s work. This initiative has empowered SAPA to, among other things, adequately fund research and development, engage in professional marketing activities, interact with government on issues affecting the industry and fight a number of legal challenges through the courts for the betterment of the industry as a whole.

1.3 The DPFO

A division of SAPA, the Developing Poultry Farmers’ Organisation (DPFO) was established in 2003 to assist emerging and small-scale poultry producers to enter the economic mainstream. More than just a forum, the DPFO meets the needs of this sector by building capacity and taking on an advocacy role on behalf of emerging poultry producers, exerting pressure,and mobilising resources from various stakeholders including government, the private sector and the donor community.

With some guaranteed funding now available through the statutory levy, the role of the DPFO in facilitating the participation of small scale farmers, individuals and collectives in the South African poultry sector has been greatly enhanced.

1.4 Representing the Industry

SAPA represents small scale, emerging and larger commercial poultry farmersin four sub-sectors in the association, some of which are integrated in major operations. These are the day-old chick supply industry, the egg industry, the broiler industry, as well as small scale and developing farmers.

SAPA Vision

To create a milieuwithin which members can become world-class competitorsin the food market.

SAPA Mission

To be an industry-driven organisationto address collective issues.

1.5 Improving the Industry

A fully-fledged commercial representative body, SAPA coordinates the objectives of its subsidiary organisations to improve the environment of the poultry and allied industries in South Africa.
SAPA is controlled by a Management Committee (MC) that coordinates its activities and objectives, oversees administration, and looks after the collective interests of its members.
SAPA’s MC has four affiliate committees: the Broiler, Egg, Chick Producers and Developing Poultry Farmers. Additionally, a Technical Committee consisting of workgroups coversissues likeanimal welfare and health, training, research and food safety.These workgroups involve key stakeholders such as the Departments of Health and Agriculture, Forestry and Fisheries (DAFF), the Consumer Goods Council of South Africa, the South African Veterinary Association, academics, consultants, and until February 2011, the NSPCA.
Aiming to improve and promote the egg industry across the country, the Egg Organisation critically evaluates the methodology of regulatory structures; supports an industry code of practice; liaises with government and consumer bodies; collects, compiles and distributes statistics; supports training; and builds brand awareness to grow the market for the egg industry through the successful ‘Eggs are Magic’ campaign.

The Broiler Organisation primarily tends to poultry production and processing matters throughout South Africa by promoting the SAPA code of practice; collecting, compiling and distributing statistics; promoting positive aspects of the broiler industry’s image; instituting and maintaining an importation protective tariff; and supporting industry training.

Mainly aiming to improve and maintain the standard of the country’s breeding stock, the Chick Producers Organisation gives specialised attention to matters concerning its members. This includes monitoring imports; acting as a breed society; reviewing regulations; Keeping abreast of developments in poultry breeding worldwide; providing members with technical and statistical information; and supporting industry training.

Small, medium and micro enterprises represent an important vehicle to address the challenges of job creation, economic growth and equity in our country. With this in mind, the Developing Poultry Farmers Organisation caters for the needs of small scale and emerging farmers by addressing issues affecting this growing sector of the poultry industry. The organisation also fulfills a dynamic capacity building and advocacy role, empowering provincial structures and developing partnerships with the state over time.

1.6 Information for Industry

A free flow of information between SAPA and its members as well as the industry at large is essential in advancing, promoting and protecting the interests of South Africa’s poultry industry, its producers and consumers.
Since 1906, SAPA has issued various poultry titles to air its views. In 1937, the Poultry Bulletin was launched, a magazine that continues to be published today. Through this publication and the SAPA website at www.sapoultry.co.za, effective, efficient and rapid communication is maintained and knowledge and information quickly and reliably shared.

2. THE POULTRY INDUSTRY IN SOUTH AFRICA

2.1 Feeding the Nation

SAPA’s slogan ‘Small Footprint, Big Impact’ is supported by the fact that more poultry products are consumed annually in South Africa than all other animal-protein sources combined, with the poultry industry providing 65.5% of locally produced animal protein consumed on a volume (kg) basis.
In 2011, the total amount of poultry and eggs consumed was 2,316-million tons, 30.9% more than the combined beef, pork, mutton and goat consumed during the same period.The per-capita consumption of poultry meat in 2011 was 36.12 kg; in comparison, beef was 16.62 kg, pork 4.60 kg, and mutton and goat 2.70 kg per annum. When the 8.90 kg of eggs consumed each year are added in, the evidence is overwhelming. The total amount of poultry products consumed is 45.02 kg per capita, per year.
According to SAPA figures, in 2011 - including imports - the poultry industry supplied1,773,447 tons of poultry meat and 407,544 tons of hen eggs and hen egg product, totaling a staggering 2.2 billion tons.
Justifiably claiming to feed the nation, the South African poultry industry continues to dominate the agricultural sector.
The widening gap between the consumption of poultry meat and eggs and the consumption of other types of meat is displayed in the graph below. During 2011, the graph below depicts the different protein sources in animal products, with Egg production added to Poultry production in comparison with other meat industries.

2.2 Economic Development

The South African poultry industry continues to be a major contributor to the country’s economy, not only in terms of Gross Domestic Product but more strategically, in the areas of food security and job creation.
The poultry industry is the largest agricultural sector in South Africa contributing some 24% of agriculture income in 2011 with a combined gross income for 2010/11 set at over R 31.7 billion. The industry provides direct employment for over 70 000 people and indirect employment to some 375 000 people, it is the largest consumer of maize, it supports many peripheral businesses, and it is a strong platform for rural development as well as the government’s zero hunger ambitions.
Known poultry farmers include 199 producers and 205 contract growers in the commercial broiler sector, and 267 commercial egg producers.
An important contributor to job creation and formal employment opportunities, around 10% of all workers in agriculture are employed in the poultry sector. However, it is in the informal sector that the industry impacts positively on the lives on so many more of the country’s people, with over 80% of producers consisting of Small, Medium and Micro Enterprises. Approximately 1554 small scale famers from previously disadvantaged communities have been established by government.
The establishment of the DPFO has given expression to SAPA’s strategic objective to support government’s broad-based economic empowerment, job creation and SMME development programmes.Development projects, under the auspices of SAPA and the DPFO, aim to organise SMMEsby provinces and on a national basis; facilitate access to services to provide the necessary technical skills for successful poultry and egg production;empower SMME leaders with the understanding of the drivers in poultry production and its environment; and source funds for the training and development of support structures as well as to conduct relevant research.
In summary, the poultry industry is the largest agricultural sector in South Africa, contributing some 24% of agriculture income in 2011; it provides direct employment for over 70 000 people and indirect employment to some 375 000 people; it is the largest consumer of maize; and it supports many peripheral businesses as well as those downstream in the value chain.

2.2 Economic Development

2.3 Poultry Industry’s Impact on Related Industries

Given the agricultural dominance of the poultry industry in South Africa, the downstream influence on the closely-related feed industry is considerable. Total consumption in SA of white and yellow maize is approximately 9.080 million tons, of which about 4.271 million tons (1.658 million tons white maize and 2.613 million tons yellow maize) were used for animal feed consumption.
As the main customer of the Animal Feed Manufacturers Association (AFMA), the poultry industry consumes approximately more than 2.68 million tons of maize - 30% of the total maize consumption in South Africa - which is used in feed. During the current season, the maize consumed in the animal feed industry was 61% yellow maize and 39% white maize.
According to AFMA’s annual report for the period April 2010 to March 2011, the association estimates that the poultry industry consumed 4.325 million tons of feed, of which 3.933 million tons were supplied by AFMA members and the balance by in-house/independent feed mills. Based on this, of the AFMA members’ total produced feed of approximately 5.720 million tons, 68.76% or 3.933 million tons went out as poultry feed, representing about 90.14% of the poultry industry’s total consumption and accounting for approximately R12.58 billion of AFMA's turnover. Non-AFMA members supplied the balance of about 0.392 million tons.

3. SOUTHERN African Development Community (SADC) overview

Headquartered in Gaborone, Botswana, SADC member states are Angola,Botswana,Democratic Republic of Congo, Lesotho,Madagascar,Malawi,Mauritius,Mozambique,Namibia, Seychelles,South Africa, Swaziland,Tanzania,Zambia andZimbabwe.
The SADCenvisions a common futurewithin a regional community that will ensure economic well-being, improvement of the standards of living and quality of life, freedom and social justice and peace and security for the peoples of Southern Africa. This shared vision is anchored in the common values and principles and the historical and cultural affinities that exist between the peoples of the region.
The SADC’s mission is to promote sustainable and equitable economic growth and socio-economic development through efficient productive systems, deeper co-operation and integration, good governance, and durable peace and security, so that the region emerges as a competitive and effective player in international relations and the world economy.

3.1 The SA Poultry Industry’s Impact on the SADC

Commodity: Chicken Meat
	Production 2000	Production 2010	% Growth	% of total (2000)	% of total (2010)	Population
Unit	tons	tons	%	%	%	2007 to 2011
Angola	7 740	8 145	5.2%	0.7%	0.5%	19 081 912
Botswana	8 800	6 784	-22.9%	0.8%	0.4%	2 006 945
Congo	5 800	6 250	7.8%	0.5%	0.3%	65 965 795
DR of Congo	11 600	10 880	-6.2%	1.1%	0.6%	4 042 899
Lesotho	1 800	2 280	26.7%	0.2%	0.1%	2 171 318
Madagascar	32 000	37 520	17.3%	3.0%	2.1%	20 713 819
Malawi	15 280	21 600	41.4%	1.4%	1.2%	14 900 841
Mauritius	21 000	46 200	120.0%	2.0%	2.6%	1 281 214
Mozambique	31 050	22 725	-26.8%	2.9%	1.3%	23 390 765
Namibia	8 560	11 600	35.5%	0.8%	0.6%	2 283 289
Seychelles	980	658	-32.9%	0.1%	0.0%	86 525
South Africa	816 859	1 471 570	80.1%	76.6%	81.6%	49 991 300
Swaziland	3 450	5 400	56.5%	0.3%	0.3%	1 186 056
Tanzania	41 820	48 500	16.0%	3.9%	2.7%	44 841 226
Zambia	35 000	42 500	21.4%	3.3%	2.4%	12 926 409
Zimbabwe	25 300	61 870	144.5%	2.4%	3.4%	12 571 454
Total	1 067 039	1 804 482	484%	100%	100%	277 441 767

Commodity: hen eggs

	Production 2000	Production 2010	% Growth	% of total (2000)	% of total (2010)	Population
Unit	tons	tons	%	%	%
Angola	4 300	4 500	4.7%	0.9%	0.7%	19 081 912
Botswana	3 200	4 500	40.6%	0.6%	0.7%	2 006 945
Congo	1 170	1 600	36.8%	0.2%	0.2%	65 965 795
DR of Congo	6 864	8 900	29.7%	1.4%	1.4%	4 042 899
Lesotho	1 500	1 700	13.3%	0.3%	0.3%	2 171 318
Madagascar	14 900	16 100	8.1%	3.0%	2.4%	20 713 819
Malawi	19 500	20 200	3.6%	3.9%	3.1%	14 900 841
Mauritius	12 500	10 000	-20.0%	2.5%	1.5%	1 281 214
Mozambique	12 353	14 500	17.4%	2.5%	2.2%	23 390 765
Namibia	1 590	3 360	111.3%	0.3%	0.5%	2 283 289
Seychelles	2 170	1 060	-51.2%	0.4%	0.2%	86 525
South Africa	318 000	453 000	42.5%	64.4%	68.9%	49 991 300
Swaziland	1 050	1 160	10.5%	0.2%	0.2%	1 186 056
Tanzania	33 800	37 700	11.5%	6.8%	5.7%	44 841 226
Zambia	39 150	49 500	26.4%	7.9%	7.5%	12 926 409
Zimbabwe	22 000	29 600	34.5%	4.5%	4.5%	12 571 454
Total	494 047	657 380	320%	100%	100%	277 441 767

4.INTERNATIONAL COMPETITIVENESS

4.1 International Exposure

Poultry imports into South Arica are in part driven by the exchange rate, which negatively affects the potential expansion of the local poultry industry and has done so for the last eight out of ten years. During 2011, the annual imports under tariff headings 0207 (raw poultry) and 1602 (processed poultry) were approximately 20% of domestic consumption.
Exports promise a window of opportunity for the industry, although access to large markets such as the EU and USA remain problematic as sanitary measures forbid local exports to these regions. In addition, the production costs of competitor nations such as Brazil, where input costs such as feed which account for around 70%, are substantially lower than in South Africa. To be truly competitive, a level playing field is required.
Illegal cross border trade poses substantial risks to the poultry industry, not only economic but also from a disease perspective, which has taken on an increasingly critical dimension given the spread of Notifiable Avian Influenza. In its drive to combat smuggling, SAPA uses various agencies to assist the state in their efforts.

4.2 Broiler Meat Production

Of the 204 countries listed as producing 86.2 million tons of world broiler meat in 2010, the South Africa occupies 10th position with a market share of 1.7%. The first three countries total 46% of world broiler production. These are the USA with 20%, China with 14% and Brazil with 12%.3

4.3 Hen Shell Egg Production

Of the 204 countries listed for hen shell egg production, South Africa is ranked 26th with a market share of 0.7%. World egg production is dominated by China with 37.5% (23.8 million tons) of the global total of 64 million tons; other major producers include the USA with 8.5%, India 5.4% and Japan 4.0%.4

5. DAY-OLD CHICK SUPPLY INDUSTRY

5.1 Overview

The day-old chick supply industry supplies inputs to both the egg and broiler industries. Pure lines are imported at great-grandparent or grandparent level. Most imports are at grandparent level with some parent level imports. No commercial level day old chicks or fertile eggs may be imported.
The following factors influence this industry:

It is a time consuming process, due to the lag time in expansion of commercial chick numbers: at least 18 months are required from pure lines and six months from parent stock.
The Livestock Improvement Act stipulates pure line imports.
A quarantine period of 8 weeks from day-old applies to all imported live chicks.
During the whole rearing period it is critical to control the mass of parent females and especially so between the 18 to 24 week period. If not according to standard, dramatic losses at the level of fertile egg numbers and overall profitability will be experienced.

The following diagram illustrates the poultry meat process from breeding stock being imported to the first commercial product produced:

Commercial broiler chick placements were 1.036 billion during 2011. The potential number that can be hatched is 20.3 million per week;
6.521 Million female parents produced a commercial progeny of 1.036 billion chicks for the broiler industry from an estimated 400 000 grandparents and great-grandparents;
Layer Breeder parents were estimated at 300 000 per annum (2011);

5.2 Genetic progress

Layers:

TRAIT	2010	2011
EGGS PER HEN PER ANNUM	280	280
KG FEED PER KG EGGS	2.49	2.4
% MORTALITY PER ANNUM	7.45	7.45
% HENDAY PRODUCTION	79.7%	79.7%

Broilers:

TRAIT	1968	1998	2004	2011
SLAUGHTER AGE	62 days	42 days	38 days	35 days
LIVE MASS	1.18 kg	1.79kg	1.82 kg	1.85 kg

Note:

Availability of broiler chicks to the industry at large is such that figures based on parents placed indicate that substantial oversupply is possible. Statistics show a steady increase in potential availability of commercial chicks, to well on 20.3 million and more per week.
The inflow of broiler imports is still substantial and harming potential expansion of chick producers as 20% of the end product market has been replaced with imports in 2011.

5.3 Turnover

With continued growth in egg and broiler producers, the chick industry continues to grow. Egg industry turnover increased from R109 million in 2006 to R158 million in 2011, while chick supply to the broiler industry increased from a turnover of R1.975 billion to R3.66 billion.

5.4 Production

Chick placement numbers per annum

Broilers

The following graph illustrates the increase in broiler breeder placement numbers from 2000 to 2011.

Average Broiler Breeders Placed per Annum

The effect of a then growing economy is clear from the increase in broiler breeder placement numbers. In the Congress 2008industry overview, it was postulated that continued growth would be affected by interest rates and input cost recovery by producers. The worldwide economic fiasco added another dimension to chicken and chicken product consumption. Showing the sideways trend in the potential broiler placements during 2011, the following graphs are derived from parent-stock placements, which do not take into account the full effect of earlier depletion of breeder flocks.

Potential Broiler Placements per Week

Potential Broiler Placements per Year

Generic egg marketing showed results in a better-than-expected upward trend in 2011 on commercial egg producers, as illustrated in the graph below.

5.5 Prospects for 2012

The total of 8.567 million day-old broiler parents placed in 2011 was 84 000 less (-1.2%) than the previous year. It is forecasted that the number of parent pullets placed in 2012 will increase by 87 000 (+1.6%) to a total of 8.654 million.
An estimated total of 24.412 million day-old pullets were hatched for the egg industry in 2011. This constituted 66 000 chickens less (-0.4%) than in 2010. It is forecasted that 24.803 million day-old pullets will be hatched in 2012. This will be an increase of 391 000 (+1.6%) day-old pullets compared to 2011.

6. EGG INDUSTRY IN SOUTH AFRICA

6.1 Overview

Continuous growth in egg production was maintained during 2011. During the year, the average number of cases produced increased by 16 600 (+4.6%) to 371 900 per week. The average laying flock for 2011 was 24.2 million hens, which amounted to an increase of 1.06 m layers (+4.6%) compared to 2010.
Day-old pullet placements remained at an upward trend during 2011 relative to 2010.
In total, egg production in 2011 amounted to 19.4 million cases. Forecasts indicate that the total egg production will increase by approximately 400 000 cases (+2.1%) to 19.8 million in 2012.
The industry surpassed its previous peak of 18.663 million cases reached in 2008, by 0.74 million to 19.4 million during 2011.

6.2 Turnover

At a gross turnover of R6.951 billion at producer level, eggs take their place as the fourth largest animal-product sector in agriculture in South Africa. About 580 million dozen eggs were sold in 2011 through various channels.

6.3 Egg Production

Day-old pullet production
Day-old pullet placements for 2011 amounted to 25.63 million. Compared to 2010 this is an increase of 4.51%. On average 493 100 day-old pullets were placed per week during 2011.

Laying flock and egg production
The laying cycle was extended by two weeks, implying that during 2009 the depopulation age of laying hens increased from 69 to 71 weeks of age and remained at 71 weeks for 2010 and 2011.

6.4 Laying flock and egg production

The laying cycle was extended by two weeks, which implies that during 2009 the depopulation age of laying hens increased from 69 weeks to 71 weeks of age and remained at 71 weeks for 2010 and 2011.

The average number of 24.16 million layers projected for 2011 is 1.06 million hens more (+4.6%) than the corresponding flock for 2010.

The total production for 2011 amounts to 19.340 million cases. Compared to 2010 this represents a year-on-year increase of 864 300 cases (+4.7%).

The total annual egg production increased from 355 300 cases per week in 2010 to 371 900 cases or 4.7% more in 2011, with a forecast of 380 000 cases per week in 2012.

6.5 Prospects for 2012

From July 2009 to December 2011 the laying flock has grown by 2.872 million (+13.2%) to a total of 24.758 million hens.
Projections indicate that the laying flock will continue to grow during the first six months of 2012 and peak at 25 million hens in June 2012.

The average laying flock of 24.918 million projected for 2012 will be 758 000 higher (+3.1%) than the 2011 laying flock

6.6 Per Capita Consumption

The per-capita consumption for 2011 was 137 eggs - or 8.9 kg - per person per annum, an increase of 3.4% in comparison with the 2010 figure of 132 eggs per annum.
From the above graph depicting egg consumption in 2010, it is clear that considerable scope exists for increase in per-capita consumption, particularly taking into account the price competitiveness of eggs as a protein source compared to other animal proteins.

6.7 Trade

Locally, egg exports continued to operate from a low base and could perhaps become a long-term business opportunity for South African producers. Imports of egg products were also pleasingly low. During 2011, egg exports totalled 2 786 tons, which is 26% or 976 tons less than the previous year. In 2002, a record 11 000 tons were exported, and although on a declining trend from 2002 to 2005, export of shell eggs started increasing from 2007. Shell eggs contributed 66% of egg exports.

Total Egg Exports

Total egg imports, including shell eggs and egg product (liquid and dried), were 268 tons in 2011, 58 tons or 28% more than the previous year. The egg product component amounted to 267.8 tons.

6.8 Cost of Production

In 2011, layer feed prices maintained an upward trend after the downward momentum of 2009 and 2010. The layer feed price increased by 11.5% in 2011 in comparison with 2010, after a decrease of 11% in the previous year. The feed price did not reach levels it had before 2008 when an upward momentum on the back of rising maize and protein prices reached an average increase of 30%. In 2011, the average layer feed price was R2 344.23 per ton.

6.9 Provincial Distribution of Layers on Layer/Layer Breeder Farms

In the table below, the provincial distribution of layer farms in South Africa are depicted. This is not necessarily the province where the product is sold. For the purposes of this report, in order to keep participants’ information confidential, the Northern Cape and Western Province will be considered as one province and.

PROVINCE	TOTAL LAYER BIRDS	% OF LAYERS
Eastern Cape	911 426	3.4%
Free State	4 561 812	17.0%
Gauteng	6 610 998	24.7%
KwaZulu-Natal	4 086 989	15.3%
Limpopo	1 542 903	5.8%
Mpumulanga	1 231 839	4.6%
North West	2 585 161	9.7%
Western and Northern Cape	5 229 426	19.5%
TOTAL	26 760 554	100.0%

A total of 257 layer farms - including layer breeders and layer rearing farms - took part in the NAI surveillance survey.

6.10 Structure and Contribution

The egg industry boasted an average laying flock of 24.2 million layers in 2011 that produced 19.3 million cases or 580.2 million dozen eggs, and is a major supplier of food to the nation with 405,000 tons consumed in that year.
With an estimated 6 000 workers nationwide, the egg industry is an important player in rural employment. An estimated 5 011 workers, 530 supervisors and 300 managers were employed in the industry during 2011, covering support staff, processing, packing, laying, rearing-pullet hatching, parents, parent-rearing and hatching, GP laying and rearing.
Layers of all stages consumed 0.8 million tons of feed in 2011 (Source: AFMA).
Human egg consumption increased by 21% from 113 eggs in 1999 to 137 eggs in 2011. The per capita poultry consumption is set to increase commensurate with the escalation of the standard of living and economic growth. Redistribution of wealth and opportunities will lead the way in achieving the material advancement of the population at large. The industry’s fortunes are closely linked to the level of disposable income. 49 egg producers (SAPA members and non-members) produce in excess of 60% of total egg production while hundreds of smaller producers supply the balance. New entrants into the egg industry are free to enter, the only limitation being availability of day-old chicks, point of lays, capital and expertise. Producers in the formal and informal industry sell layers as live birds at depletion age.
Normally the egg industry follows cycles linked to the economic cycle and climatic factors. Annual cycles reflect the normal highs in Easter and December. The present financial positions of both big and small producers are seriously marred by cost pressures, the state of the economy, and imports. The egg industry is totally dependent on maize and greatly affected by its price as maize is the source of feed energy to the industry. Dependence on other feed ingredientsand packing facilities isa crucial determinant in the industry.

7. BROILER INDUSTRY

7.1 Overview

As major supplier of food to the nation, including imports, 1.7 million tons were consumed in 2011. In 2011, the weekly production of broilers was 18.773 million broilers slaughtered per week at 1.40 kg dressed mass, of which an estimated 1 million per week is in the informal sector. Approximately 60 000 staff are employed in the formal sector and main input supply industries. According to the AFMA chairman’s report, 3.13 million tons of their feed, representing 54.7% of the national feed production, was consumed by the broiler industry in 2011.
Poultry consumption is set to increase commensurate with the escalation of living standards and economic growth. Redistribution of wealth and opportunities will lead the way in achieving the material advancement of SA’s population as a whole, and the poultry industry’s fortunes are closely linked to the level of disposable income.
70% of broiler production is supplied by 44 producers (SAPA members and non-members), with hundreds of smaller producers supplying the balance. New entrants are free to access the industry, with the only limitation being the availability of day-old chicks, capital and expertise. There are a total of 265 abattoirs. Many producers sell live birds at slaughter age in the formal and informal sector.
Normally the poultry industry follows the cycles which are linked to the economic cycle and climatic factors, with annual cycles reflecting normal Easter and December highs. The present financial position of both big and small producers is seriously marred by cost pressures, the state of the economy and imports.
Factors impacting the broiler industry include feed costs, import tariffs, anti-dumping duty, maize prices, as well as dependence on feed ingredients and slaughter facilities.
The exceptionally high and increasing demand from 2006 to 2008 did not continue through to 2011, with SAPA estimating an increase of 1% in total broiler production from 2010 to 2011. The year has seen further expansion in the poultry market in South Africa as producers gear themselves for future demand and capitalise on economies of scale and the advantage that volume brings to tight realisations.
Chicken remains an affordable protein source relative to other meat-protein sources.
The average producer price for beef abattoir selling prices for class A2/A3 was R28.53 per kg in 2011, while the beef abattoir selling prices for Class C2/C3 was R24.67 per kg. The average price for 2011 for pork, all classes, was R16.77 per kg. In comparison with the other types of meat, the total realisation (less all discounts, rebates and secondary distribution) broiler producer price was R13.63 per kg in 2011.

The graph depicts the comparison of average annual producer prices for beef, pork, poultry meat and eggs for 2011

7.2 Turnover

The gross farm income from poultry meat for the period 2011 (as recorded by the DAFF) was R25.713 billion. The cattle-and-calves industry was the second largest.

7.3 Broiler Production

The poultry industry, including meat and eggs, continues to dominate the agricultural sector in South Africa. It is the main supplier in kilogram and protein terms as more poultry products are consumed per annum than all other animal protein sources combined, with beef consumption second. Poultry has shown an upward trend in consumption over the past five decades.
The 2011 per-capita consumption of poultry meat was 36.12 kg per annum, compared to 16.62 kg beef, 4.6 kg pork, and mutton and goat consumption combined at 2.7 kg.

Total per-capita Consumption of Animal Protein

7.4 Volume and Growth

Broiler Breeder Placements

Day-old parent pullets placed

Continuous growth in day-old broiler parent placements has been recorded over the past five years although the rate of increase in parent placements slowed in 2010 and levelled off in 2011.

Monthly Day-old Broiler Parents Placed

A total of 9.3 million day-old parent pullets were placed in 2011, averaging 178,400 per week and 1,500 more (+1%) than the corresponding placement in 2010.

Broiler breeder flock

The average flock of 6.520 million hens for 2011 is 42,330 more (+0.65%) than the corresponding 2010 flock.

Average Broiler Breeders per Annum

Broiler chick placements

A total of 1.036 billion broiler chicks were produced during 2011 at an average of 19.862 million placed per week - 78 300 more (+0.4%) than the weekly placement in 2010.

Potential Broiler Chick Placements per Week

7.5 Broiler Production

Industry growth

The estimated average weekly production of 18.773 million broilers for 2011 is 193,200 more (+1.0%) than 2010.

7.6 Prospects for 2012

Over the five years from 2004 to 2008, day-old parent placements increased at an average of eight percent per annum. Over the next three years, the increase in day-old parent placement slowed to an average of one percent per annum.
Placement of 9.237 million day-old parent pullets is projected for 2012. Compared to 2011, this will be an increase of 1.6% (145 000) pullets.
The average broiler breeder flock of 6.543 million hens forecasted for 2012 will be only 22 000 hens more (+0.3%) than the 2011 flock.
Day-old broiler production forecasted for 2012 amounts to 1.057 billion chickens. This will be 21 million more (+2.0%) than the total 2011 placement.
Projections indicate that 995.2 million broilers will be slaughtered in 2012, an increase of 16.3 million (+1.67%) compared to 2011.

7.7 Per Capita Consumption

The per-capita consumption of poultry meat was 36.12 kg per annum, with broiler meat the main contributor at 35.7 kg per person per annum in 2011 (Source: SAPA). The consumption of broiler meat has been met by increased imports (+32%) and industry growth (+1%). It is expected that producer expansion should meet increased demand.
Part of the rise in chicken-meat consumption the last few years resulted from the broiler industry's response to demands by consumers and food-service operators for value-added, brand-name and convenience products, and not only from commoditised volume products. Chicken producers are in demand; people want chicken meat and continue to consume it. The per-capita consumption shows that there is still opportunity for tremendous growth in demand for chicken products. As a comparative measure, per-capita consumption in Brazil and the United States is in excess of 40 kg. As imports make up a sizeable percentage of consumption, this suggests that we can safely grow by 50% in volume terms.

7.8 Trade

The origin of imports into South Africa shows 57% of poultry imported originates in Brazil. Brazil remains a threat to local poultry production due to the exchange-rate dynamics, competitive advantages in terms of climate, feed costs, economies of scale and government support.
Annual poultry imports into South Africa in 2011 were 350,202 tons - a 32% or 84 411 tons increase over 2010. Broiler meat accounts for 93% of all poultry imports, the balance largely being turkey products.

Annual Poultry Imports

The value of annual poultry imports at Free On Board (FOB) level for 2011 into South Africa amounted to R2.752 billion, constituting a 56% increase, or R986 billion more, than 2010.

Total FOB Value of Poultry Imports

With anti-dumping duties currently in place and further remedy being sought, with a completely free trade agreement, the loss of protection will render the industry completely vulnerable to developed world traders with severe consequences for a sustainable future.

7.9 Cost of Production

Feed costs are always significant in the industry and again so in 2011. Dramatic feed-price increases in 2008 were the result of rising maize and soya prices, the main raw materials in broiler feed. During 2009 and 2010, yellow maize, soya and sunflower prices decreased in comparison, but not to previous low levels of prior to 2008. 2011 showed a significant increase in yellow maize prices.
Producers are now competing with ethanol producers for available maize, and this, coupled with low stock-to-usage ratios, has driven prices upwards. Over the next decade, the renewable fuels mandate and drive for bio-fuels in the US will impact the global poultry industry. It is estimated that by 2015 about 36% of US maize production could be for ethanol. The US uses more maize for ethanol than the whole of Africa uses for food.

Although feed costs decreased slightly over the past two years, profit margins came under more pressure during 2011. The average reported broiler feed price for 2011 was R3 366.41 per ton, an increase of 11% compared to 2010. There is great concern in the industry that these increases in input cost will not easily be recovered and price realisation will be under tremendous pressure.
When the variation on the same month of the previous year is considered, the change in broiler feed prices have been increasing since April 2006. 2009 saw a downward trend in the variation of broiler feed price going into a negative growth from April 2009 onwards, and remaining negative through 2010 to February 2011. A positive year-on-year percentage change in an upward trend has been recorded up to the end of December 2011.
The change in broiler producer price has been on a downward trend in 2009 and showing a negative growth trend from July 2009 onwards through 2010, with positive growth recorded for the first time in December 2010 and carried through to the end of 2011.

Percentage Change in Broiler Feed Price & Broiler Meat Price on a Yearly Basis

7.10 Provincial Distribution of Broiler Farms

In the table below, the provincial distribution of broiler farms (breeder and rearing) is depicted. This is not necessarily the province where the product is sold.To keep participants’ information confidential, in this report the Northern and Western Cape will be considered as one province.

	BROILER INDUSTRY
PROVINCE	TOTAL BROILER BIRDS	% OF BROILERS
Eastern Cape	7 072 887	6.6%
Free State	5 657 563	5.3%
Gauteng	6 224 377	5.8%
KwaZulu-Natal	16 099 842	15.0%
Limpopo	2 557 200	2.4%
Mpumalanga	21 221 288	19.7%
North West	25 877 752	24.0%
Western and Northern Cape	22 898 800	21.3%
TOTAL	107 609 709	100.0%

A total of 617 broiler farms, including broiler breeders, reported NAI surveillance.

7.11 Performance Efficiency

Over a number of years, industry efficiencies have been improving, leading to a 3% reduction in broiler mortalities between 1995 and 1997 and are now in the order of 4% to 6% - on par with USA at 4%. The Production Efficiency Factor improved from 150 to 263 while international PEFs are constantly represented between 270 and 300. The difference can be explained by the disease pressure in South Africa as well as the high altitude production systems, market mix in terms of products and weights and other reasons.

7.12 Employment

The poultry industry remains an important contributor to job creation and employment with approximately 10% of all agricultural workers employed in the sector. Considering the dominance of the poultry industry in South Africa, it also has the largest influence on the feed industry as its main customer. SAPA also actively supports the job creation potential of the developing and smallholder farmers through levy spending on this strategically important industry sector.
According to SAPA estimates, 12,889 farm staff and 1,592 farm managers are employed in the broiler hatchery and rearing industries, including parent-rearing and laying sites, hatcheries and broiler-rearing sites. Employment in broiler processing totals 27 564, in distribution 6 073, and related feed industries employ more than 59 739.

7.13 Challenges

The broiler industry is enduring a significant margin squeeze brought about by exorbitant increases in raw material and energy costs. The following challenges will remain critical through the course of 2012:

The significant growth in volume of imports into South Africa, which now represents the single biggest supplier of chicken products. SAPA has a sub-committee of industry representatives that judge whether any abnormality needs to be followed up or not. The terms of reference of Afri Compliance will be extended to include referring matters for prosecution, specifically compliance with labelling regulations in terms of Regulation R146. SAPA successfully lodged an anti-dumping application with ITAC regarding imports from Brazil and provisional increased tariffs were implemented. The aim of these efforts is to ensure a healthy local meat industry that can meet the demands of the local consumers.
Limited disposable income will have a negative effect on per capita consumption growth
The continuous threat of poultry diseases, especially the new variant strain of IB prevalent in SA.
Higher input costs and combating these through efficiencies. There seems little relief from high feed prices, and producers will need to overcome this to remain profitable
Negative media comments around the practice of brining are a potential crisis for the industry. A hotly debated issue, the industry and the DAFF disagree regarding flavour enhancement of frozen products. The SAPA Food Safety Compliance Work Group, focus on the responsible compliance of regulation R146 of Act 54 through correct labelling and production practices. The main issue is flavour enhancement and includes not only brining but issues like self-basting. Much work has been done regarding various aspects of R146 and other regulations, including negotiations with the DAFF and the Department of Health to protect the interest of the industry in this regard. Cooperation between the industry and government is of the utmost importance to ensure food security and compliance with the Meat Safety Act. The review of Regulation 153 is part of this effort.

In evaluating the SA broiler industry, it is useful to keep in mind that the high transport cost of raw materials via Spoornet’s rail service adds substantially to import parity, the domestic parameter affecting maize - and therefore feed - price.

There are intrinsic disadvantages in SA for poultry production that inhibit the producers from becoming one of the best in the world. These include:

Low yield and relatively high prices of grains, aggravated by the buffer effect of domestic and international freight and duty;
Poultry production at high altitudes;
Free movement of (even diseased) culled birds;
Many informal flocks;
Relatively unhindered (at zoo sanitary level) imports of poultry meat from many countries.

8. THE DEVELOPING POULTRY FARMERS ORGANISATION

A division of SAPA, the Developing Poultry Farmers Organisation (DPFO) was formed in 2003 to cater for the specific needs of emerging and small-scale poultry producers - eggs, broilers or live birds - in a dynamic process that will enable emerging poultry farmers to finally move into the mainstream of the economy.
The DPFO Committee provides strategic direction to the SAPA DPFO coordinator and day-to-day guidance as and when necessary. Committee members bring their practical knowledge of poultry affairs in their provinces to committee meetings and collectively formulate the direction of the DPFO across the country. In this respect, the committee operates like the Egg, Broiler, Chick Producers’ Organisation, and the Training and Technical committees.
As emerging and contract broiler farmers constitute about 2% of the South African total and egg producers less than 0.5%, there is still a long way to go and much work to be done.

8.1 Objectives

Strategically, the DPFO aims to maintain the organisation as an independent body but with the same rights as the other legs of SAPA. It advances the interests of the SA poultry SMME sector by promoting and furthering all matters necessary to ensure a healthy developing poultry sector in SA.
The DPFO works toward the improvement of the total broiler, egg and allied SMMEs as a financially feasible industry. This includes production, grading, packing, transportation, storage and marketing activities.
Some activities to support the strategy include:

Securing profitable production and supporting sustainable projects to supply broiler products to consumers in areas where developing poultry farmers are active;
Protecting developing poultry and egg producers and the industry from adverse legislation and other negative actions;
Promoting access to finance for members to develop businesses;
Collating information and market intelligence and making it available to members to assist them in successfully marketing their products through an understanding of the overall market phases.

The DPFO plays a capacity-building and advocacy role by mobilising resources through government (mainly provincial), the donor community, and through training resources. The outcome of DPFO efforts to facilitate the entry of small scale famers, persons and communities into the main-stream agricultural economy is to contribute to food safety and facilitate wealth creation in South Africa.
While poultry production faces a positive future, it is not easyto enter the mainstream markets. There is a definite minimum size for a broiler farm to ensure it is sustainably profitable; also, it must be close to feed, veterinary, abattoir and cold-chain facilities. Egg producers face slightly fewer constraints; it is a little easier to enter and for emerging farmers, it could be a more attractive proposition.
It is unlikely the DPFO will reach all corners of SA; early efforts are concentrating in existing ‘chicken belts’ where support, transport, abattoir infrastructure and state resources are likely to be available. The DPFO initially expects not to be active in rural micro-scale arenas that produce broilers and eggs essentially for their own consumption.
The DPFO’s work must lead to the management of successful and sustainable enterprises. As they are close to feed supplies, abattoirs and markets, there is a greater chance of farmers progressing to become contract growers or joining with other small farmers in production clusters or cooperatives.

8.2 The DPFO Brand

The launch of the DPFO logo and brand identity has created considerable interest among emerging and developing farmers. It has strengthened the visibility and presence of the organisation, encouraging membership and motivation from amongst those already on board. Both existing and new members can now clearly see that the DPFO is “open for business”.

8.3 Membership

DPFO membership continues to grow and now stands at some 250 farmers, attributed to the successful provincial brand launches and certain Gauteng district engagements with farmers and government. The recently launched DPFO newsletter further promotes membership, and the Poultry Bulletin is a DPFO mouthpiece too, with members and extension officers are urged to report events or news and supply material.
The committee’s decision to mobilise members through provincial conferences, the logo launch and branding, as well as engagement in the media has proved correct, with provincial and district structures producing results favourable to farmers.
Recognising the strategic importance of agricultural partners, provincial launches are all planned together with provincial Departments of Agriculture and the host local and district municipalities. The DPFO has also been pushing government to open supply opportunities for emerging farmers to be able to supply hospitals, prisons and schools via the tendering systems.
As farmers generally operate in isolation, the DPFO aims to establish a home for like-minded persons to belong to in formal structures so services reach targeted people faster and at a lower cost. By working in groups, emerging farmers can pool resources and compete more forcibly. Customers also prefer these structures as they provide supply security.

8.4 Statistics

The DPFO participates in SAPA’s statistics collection from emerging farmers on a quarterly basis, a service that informs this sector of industry statistics and how they relate to their own situation. During Q4 of 2011, 228 farmers were interviewed - a higher number than previously – and SAPA can now report on emerging farmers in the broiler industry with statistics that includes 2 hatcheries, 180 broiler farmers, 11 contract growers, 2 abattoirs and 33 egg farmers.
SAPA statistical reports for the DPFO can be downloaded from www.sapoultry.co.za under ‘Statistics / Quarterly Reports / Developing Poultry Farmers’.

8.5 Poultry Health

As biosecurity forms the foundation of poultry health and, in turn, reduced mortality rates for broilers and layers, the DPFO encourages emerging farmers to report mainline diseases such as Newcastle Disease and Avian Influenza and to eradicate these with assistance from state vets to prevent mass mortalities or mass culling because of diseases out of control.

9. MAJOR DRIVERS IN THE POULTRY INDUSTRY

Major supply side issues facing the industry include the maize price, which is influenced by exchange rates, CBOT, local crop size and SAFEX speculation; diseases such as Newcastle Disease and the potential of Avian Influenza; and imports.
Demand side issues include consumer preferences; imports (exchange rate driven); and the effect of diseases such as Avian Influenza and Newcastle Disease.

10. NATIONAL AGRICULTURAL STRATEGY (NAS)

10.1 NAS and the Role of SAPA

SAPA has collaborated with the DAFF on a series of strategic programs and projects to support and give effect to the National Agricultural Strategy. SAPA believes that the most successful formula will arise from an active and meaningful partnership between industry and government, so SAPA’s efforts are directed towards this goal.

10.2 The Department of Agriculture, Forestry and Fisheries (DAFF)

The DAFF has launched their Strategic Plan for the period 2012/13 through to 2016/17 that outlines areas of focus for the department linked to specific strategic objectives and deliverables. The six strategic goals of the department are:

To increase profitable production of food, fibre and timber products by all categories of producers;
Sustained management of natural resources;
Effective national regulatory services and risk management services;
A transformed and united sector;
Increased contribution of the sector to economic growth and development;
Effective and efficient governance.

During 2011, the DAFF’s focus was on the development of a specific policy framework that will allow the department to implement and drive strategic goals. The fivekey policies are:

The Zero Hunger Programme which seeks to link subsistence and smallholder producers to institutions like schools, hospitals and prisons, and also meet the nutritional needs of low-income individuals and households;
The Strategic Plan for Smallholder Producers to grow numbers and improve support to this sector;
The Aquaculture Programme;
The agro-processing strategic framework, which supports the agriculture, forestry and fisheries sectors to achieve job creation and other priority targets;
Elevating the spatial analysis of agriculture, forestry and fisheriesto identify high-impact interventions at a national provincial and local level that further guide both the conceptualisation and implementation of initiatives such as Zero Hunger and Strategic Plan for Smallholder Producers.

It is clear from the strategic document that government - and the DAFF particularly - is preparing to implement these programmes to enhance and improve the productivity of the sector.
So what does this mean for the poultry industry?Outcome 7 of the strategic plan presented at the DAFF delivery forum - “creating vibrant, equitable and sustainable rural communities and food security for all” – means there are many outputs that will impact on the poultry industry and how business is conducted.The DAFF is focusing on the development of smallholder farmers, targeted because they are between subsistence and commercial producers. The government aimsto see more smallholder farmers graduating to commercial farmers and fewer regressing to subsistence.

11. ANIMAL HEALTH / DISEASE

In the event of a disaster, the current replacement value of the poultry industry investment is estimated at R20 billion. To mitigate this risk, a number of programmes have been developed and supplemented over time to protect the industry and ‘Protect the Flock’.
A routine surveillance program for Notifiable Avian Influenza (Bird Flu)using a protocol in line with OIE guidelines has been in place since September 2005. According to the protocol, all commercial ostriches, chickens, and non-commercial chickens are sampled and tested six-monthly for both the H5 and H7 Avian Influenza subtypes.
A previous outbreak of H5N2 in ostriches in the southern Cape was successfully eradicated by culling. No further isolations or identification of the highly pathogenic virus could be made until 2012, when a new outbreak has decimated the ostrich flock. The EU informed South Africa that it no longer accepts the country’s status as free from Highly Pathogenic Notifiable Avian Influenza (HPNAI), until certain conditions have been met. While chickens have, at all times, remained negative for the H5 and H7 viruses, the current outbreak hascaused some alarm in the industry.
The industry is now almost resilient to the effects of diseases on our poultry sector as a whole due to the continuous waves of various diseases moving over it on a constant basis. Regular vaccination against a variety of diseases helps to contain the situation. Catastrophic diseases such as Newcastle Disease remain virulent for the fifth year of constant occurrences, not to mention coryza, fowl pox, low-pathogenic AI, fowl typhoid and others. Also on the Mycoplasma spp. incidence we have not moved forward as very few flocks, if any, are still Mycoplasma spp. negative. This, together with live-bird movement, highly variable bio-security and poor vaccination programs makes it impossible to effectively manage diseases in the industry. It will take a structured and supported long-term disease-reduction programme to at least reduce the negative impact of diseases on egg and broiler economics.

11.1 Disease Management, Prevention and Control

Since the first outbreak of Newcastle Disease (NCD) in the late 1960s, veterinary authorities delegated implementation of control measures for diseases with endemic proportions to the poultry industry. Since then, in consultation with the government veterinary services, the industry has been responsible for control of NCD.
The growing number of smallholder and developing poultry farmers since 1994 has created a need for effective disease control for the informal sector. The increase in the spent-hens trade and the wider movements of these has magnified disease control issues. Smallholder farmers generally have few birds and their income is too small to afford private veterinary services. As a result, their losses due to disease outbreaks are devastating as was the case in the last NCD outbreak that wiped out almost all small chicken flocks.
Village chickens generally kept for subsistence also play a role in the cycle of diseases as virtually all these poultry keepers do not vaccinate their chickens. Since most are kept for feeding families, their movements are limited due to low levels of trading although this does not exclude them from being wiped out by highly pathogenic diseases. A strategy for protecting these is also necessary.
The first - and subsequent -outbreaks of disease, including the current Highly Pathogenic Avian Influenza (HPAI) in ostriches in South Africa, have exposed the vulnerable position of the poultry industry with regards to disease control. A possible outbreak of HPAI in chickens will have serious consequences as far as protein supply to the nation and food security is concerned.
While the poultry industry may be HPAI free, the persistence of the LPAI H6N2 cannot be ignored due to its increasing production impact. The strains may not be killing large numbers of chickens, but its economic impact is concerning; thus it is beneficial to develop a strategy to eradicate this strain.
The national and provincial Departments of Agriculture have a serious vacant postsituation, with only an estimated 65% of funded posts for veterinarians and 74% of funded posts for veterinary technical personnel occupied. This hasleft state veterinary services in a vulnerable situation, and a school of thought exists that says even if all posts were filled, it is doubtful whether enough provision has been made to provide adequate veterinary services.
Notwithstanding personnel shortages placing strain on government resources, progress has been made with drafting and approving Animal Health legislation, policies, standard operating procedures, contingency plans and even a communication protocol which was developed together with all stakeholders. The provincial decentralisation of the veterinary services means each province can interpret and implement the plans as they understand them. While there is very little monitoring and evaluation of the implementation processes, this ranges from very good to very poor depending on the province, and is mostly linked to the availability of funds.
The implemented Animal Disease Communication protocol is, however, not very effective. For instance, during the HPAI outbreak in Eastern Cape, veterinary authorities were only informed two months after the onset of mortalities in ostriches by a private veterinarian. During the last foot and mouth disease (FMD) as well as the HPAI outbreaks, there was clear evidence of poor communication between the Provincial and National Departments of Agriculture.
To adequately prepare for an outbreak, an extensive database is needed containing information on all poultry diseases in the country and known outbreaks. Disease surveillance results can also be housed here. The information canfacilitate fact-based decision making by the poultry industry and government.

11.2 The Poultry Disease Management Agency (PDMA)

The poultry industry established the Poultry Disease Management Agency or PDMA, as a means to protect the national poultry flock through disease surveillance, monitoring, control and management of diseases which threaten the health of the flock and food security.
Fundedby a statutory levy paid by all poultry producersand managed by SAPA, the PDMA is located at the University of Pretoria Onderstepoort campus (OP) in the poultry section of the Production Animal Studies Department.In effect, the PDMA partly follows on from the Poultry Reference Centre that ceased operation at OP in late 2010.

The PDMA’sstrategic goals are to have direct involvement in poultry disease control measures through:

Influencing policy for controlled diseases;
Disease surveillance of commercial and non-commercial sectors of the poultry sector;
Reduction of disease levels nationally, including microbials;
Rapid response mechanisms to local and exotic disease threats;
Improving veterinary and animal health training within South Africa;
Establishing a formal Public Private Partnership, where the state delegates certain regulatory functions to the PDMA;
Reducing the levels of residues in poultry meat through the residue monitoring programme;
Collaboration with the ostrich industry for mutual benefit from improved disease control;
Achieving and maintaining export status for the benefit of both industries.

These goals translate into the PDMA strategic priorities of:

Engaging national and local government on issues of disease control in the SA poultry industry;
Making use of the database of poultry farms in South Africa to assist the DAFF with monitoring notifiable diseases such as Avian Influenza, Salmonella and Newcastle Disease, while simultaneously using it to develop monitoring programmes for critical diseases such as Infectious Bronchitis;
Appointing or designating veterinarians with expertise in poultry diseases in each province who are available to assist state veterinarians in the event of disease outbreaks in commercial, smallholder and subsistence poultry;
Investigating the role of the PDMA in training state veterinarians and/or animal health technicians to improve services delivered by the state in the event of disease outbreaks on poultry farms;
Considering developing a residue monitoring programme for poultry products nationally, or at least a database of residue monitoring data that is available;
Delivering improved technical and veterinary support to smallholder poultry farmers so they can achieve greater production success in collaboration with state veterinary services or through the PDMA’s own initiatives;
Collaborating with the ostrich industry.

The PDMA and SAPA will especially concern themselves with the Agricultural Production, Health and Food Safety; Food Security and Agrarian Reform; and Economic Development, Trade and Marketing branches of the DAFF. The establishment of the PDMA and its successful implementation during 2011 and 2012 is a major step to ensuring the industry’s flocks of commercial chicks, layers, broilers; indigenous and smallholder birds are protected.

11.3 The Research Chair in Poultry Health and Production

The appointment of the Research Chair is another key founding block in restoring the Poultry Reference Centre at the University of Pretoria’s Onderstepoort (OP) campus.Located at OP in the poultry section of the Production Animal Studies Department, Veterinary Science faculty, the Chair is funded by SAPA but employed by the University.
The Chair and the Director of the PDMA work closely together on disease issues with the one feeding the other. Theirjoint location at OP ensures a collegiate atmosphere together with the poultry teaching staff of the institution, ensuring the industry has sufficient research and academic support commensurate with the size and importance of the poultry industry. For data confidentiality, the actual surveillance work will be undertaken off-site in the same way the industry has with the NAI work to assist the DAFF.
The close proximity of the Onderstepoort Veterinary Institute (OVI), the Onderstepoort Biological Products (OBP) and the DAFF offices in Pretoria makes for a powerful poultry disease liaison group.
The Chair’s Objectives are:

To develop, conduct, promote and disseminate research in the areas of diseases, other health issues and production management of importance to the poultry industry including those emanating from associated avian industries in Southern Africa;
To train postgraduate students in research methodologies and focus areas of importance to the poultry and associated avian industries;
To strengthen the research capacity at the University of Pretoria and collaborating institutions.

It is estimated that on average one new animal disease emerges every year and over 70% of emerging or re-emerging diseases are zoonotic. The role of the Chair in this regard is vital.
The Chair is managed via a Poultry Management Advisory Council (PMAC) that sets policy and strategy, and includes equal representation from the faculty and from SAPA.

The Organisation Chart

SAPA provides the Chair’s salary; once-off funding for the recapitalisation of the research infrastructure of the faculty in the area of poultry diseases; and funding for the PDMA. Pretoria University provides infrastructure for the Chair; the operational budget for the Section of Poultry Health; the poultry research facilities under the management of the Department of Production Animal Studies; and accommodation for the PDMA.
SAPA also supports individual research projects on a per case basis. The Faculty will apply for funding from THRIP (Technology and Human Resources for Industry Programme), a Department of Trade and Industry initiative, through the National Research Foundation that potentially increases the research budget by 50% for successful applications, thereby increasing the scope of research work SAPA can fund at any university.
What will the poultry industry get for this investment? Firstly, a system that ensures poultry studies are given the status they deserve, and secondly, the development of research capacity. Thirdly, the industry has a productive home for the PDMA in a collegiate environment with other scientifically minded people, which will also serve as a sounding board for PDMA staff. Fourthly, South Africa has a top quality physical research facility which will also attract post graduate student interest. The partnership will be renewed depending on the renewal of the statutory levy.
In addition to the OP activities, SAPA supports research into poultry production and welfare at the UP Department of Animal Sciences (Hatfield campus) and at the University of KwaZulu-Natal’s Discipline of Animal and Poultry Science and the University of Stellenbosch’s Department of Animal Sciences. Acceptance of research proposals and fund allocation is the responsibility of the SAPA Research Selection Committee, while individual post graduate research bursaries are managed by the SAPA Training Committee.
Of considerable importance to the industry, poultry welfare ranges from how layers are housed and broilers are handled through to how end-of-lay birds are disposed of. These and many other aspects of poultry production are covered by the SAPA Code of Practice, which defines minimum standards that must be adhered to. Animal ethics applicable to research activities are also controlled.

12. FOOD SAFETY AND COMPLIANCE

Matters of food safety and compliancethat need input from the poultry industry and other stakeholders like the DAFF, the Departments of Health and, potentially, product-control persons/food technologists from larger retailersinclude:

The effects of Avian Influenza or Bird Flu on poultry production and consumption in SA if or when it occurs in the country;
Broiler-processing regulations Notice No. 153 of 24/02/2006 under the Meat Safety Act (Act 40 of 2000) and its effect on the availability of safer chickenmeat products for the consumer;
Regulation R146 under the Foodstuffs, Cosmetics and Disinfectants Act (Act 54 of 1972) which deals with regulations on labelling and advertising of foodstuffs; it affects a number of marketing and production practices;
The Consumer Protection Act, which regulations came into effect in April 2011;
Pathogen-reduction plans and the responsible use of antibiotics in broiler growing and egg production processes;
The ethical responsibility of poultry farmers and veterinary poultry consultants in the responsible application of antimicrobial remedies;
Water pick-up and flavour enhancement, referred to as brining;
Food safety and quality audits.

12.1 Meat Safety Scheme

As part of the Meat Safety Act, Act 40 of 2000, the issue of independent meat inspection (IMI) remains unresolved with government even though the absence of the scheme is negatively impacting retailer audits scores and possible export requirements.
The poultry industry proposes poultry meat inspection be separate from red meat inspection, and prefers an independent assignee. A PrivatePublic Partnership between the industries and state, or a possible State Owned Enterprise, was mentioned as a likely possibility by government, but the costs of these solutions remains contentious.
The Department of Health is, in principle, interested in delegation of authority in terms of Act 54 required for the Assignee proposal to work. It involves enhancing meat safety practices, conducting surveys, conducting training, investigating food-borne diseases, promoting good hygiene practices, determining origin of meat and animal products, monitoring residues in meat and animal products, creating meat and hygiene services / hygiene assessment services, creating standard microbiological testing protocols, all national production to a common minimum standard, all imported products can be tested to scheme standard (possible to create barriers), all further processing by importers able to be tested to same standard as local industry, opportunity for more pro-active consumer engagement, and fair tariffs for all on a cost-recovery basis.
Negotiations are ongoing to settle the issue to the satisfaction of all stakeholders.

12.2 National Residue Monitoring Programme (NRMP)

At present, the DAFF is testing chemical residues in meat at only a few abattoirs. As a result, large poultry producers and retail companies conduct their own residue monitoring for their products. As these results are private, they are never fed into a National Residue Monitoring Database where they would be available to all stakeholders, including consumer organisations.
Following a request from the DAFF to cooperate on the implementation of a National Residue Monitoring Programme to supplement the ostrich industry’s initiative developed to meet EU requirements, government released a draft paper on the National Residue Monitoring Programme in poultry. It proposes that all available inputs and records of residue analyses done on regular basis for retailers as part of an industry driven residue monitoring programme be made available to comply with international requirements for exports as well as including minimum residue level (MRL) compliance as part of the import requirements. Sampling imported products regularly is very important as MRL standards need to be set for these as well.

13. TRAINING AND SKILLS DEVELOPMENT

With training for the poultry industry an area of major emphasis, SAPA’s training strategy for the industry encompasses all levels and acknowledges the important roles of current players in this market, including:

AgriSETA (Agricultural Sector Education and Training Authority;
SAPA courses – SAPA/KZNPI;
Tertiary institutions;
National Skills Fund (NSF) programmes that include SMME and management training.

The lack of skills in the industry remains a cause of concern. The need for adequate training and a solid skills pool resource remains high on the agenda of all producers. SAPA remains committed to assisting the industry by staging top-up and other courses. Since 2009, SAPA’s working partnership with the KZNPI, an accredited training service provider, presented short courses to the industry, training 300 learners in 2009 and another 190 in 2010.
At this stage, the unit standards cover production and processing, although a need exists to expand available courses so learners can complete a full learnership by attending short courses on core unit standards. This will enable learners to gather the necessary credits to qualify for the National Certificate: Poultry Production or Poultry Processing.

13.1 Levy Application

With the application of the industry levy, SAPA is steadily developing relevant training modules and programmes to improve industry performance. SAPA is also now in a position to take advantage of government funding for training.

13.2 Qualifications

A total of 199 candidates attended the SAPA/KwaZulu-Natal Poultry Institute (KZNPI) courses held in Gauteng, KwaZulu-Natal and the Western Cape during 2011. Similar courses will be presented during 2012 and shall be advertised in the Poultry Bulletin.
2012 will see the implementation of a course subsidy model that will make courses more affordable and encourage broader participation, with further information circulated to the industry. KZNPI, now known as the Poultry Management Training Centre, will continue to provide in-house training at facilities for interested parties with a minimum of 10 candidates.
Three occupationally based qualifications have been finalised, namely the poultry-farm worker (NQF2), poultry-farm supervisor (NQF3) and poultry-farm manager (NQF4). Notifications of the new curricula were sent out to industry, with comment requested as part of the verification process.
An official AgriSETA stance on transfer of credits from old qualifications through to new occupationally-based qualifications is awaited. SAPA is confident that credits obtained will not be lost to individuals who completed previous courses, although recognition of prior learning may have to be implemented.
SAPA will conduct industry skills needs analyses to identify the industry’s skills requirements and critical skills shortages, an initiative that will inform a broader skills-development strategy going forward.

13.3 DPFO Training

The organisation works closely with SAPA’s training and development manager in providing training for DPFO members on poultry production, and commercial skills and business training in the near future.

14. CONCLUSION

The poultry industry at large has experienced one of the most challenging years experienced over the last decade, including the effects of increases in feed prices that were mostly brought about by international developments. Local producers have found themselves in an environment where no forms of state support, such as subsidies, are available. The influence of higher inflation and relatively high interest rates also contributes to aggravate cash-flow problems. Many members operating in the industry experienced a year of marginal profits, if any at all, an unfortunate event that has taken its toll on the industry.

Appendix A The Broiler Industry Structure

Appendix B The Egg Industry Structure

Appendix C The SAPA Structure