Parliament: Portfolio Committee on Trade & Industry SA Poultry Industry Crisis Impact on the Value Chain FEED, GRAIN & OILSEED Parliament: Portfolio Committee on Trade & Industry 2 May 2017

OUTLINE: ANIMAL PROTEIN – VALUE CHAIN & AFMA PRICE MECHANISMS (PARITY) MAIZE & OILSEED PERSPECTIVE IMPACT ON FEED INDUSTRY / FEED COSTING DYNAMICS IMPACT ON GRAIN VALUE CHAIN POTENTIAL FOR FEED, GRAINS & OILSEEDS POSSIBLE MECHANISMS / INTERVENTIONS CONCLUSION

Animal Protein Value Chain SEED, FERTILIZER, PESTICIDE. (SANSOR) PRODUCTION (PRIMARY AGRIC, MAIZE, ETC) STORAGE (AGBIZ GRAIN) LABOUR AND ROAD TRANSPORT VERY IMPORTANT CONTRIBUTORS THROUGHOUT THE WHOLE VALUE CHAIN TRADE (SACOTA) TRANSPORT (RFA) ANIMAL FEED (AFMA) PRODUCER (SAPA - POULTRY) PROCESSOR (SAPA - POULTRY) RETAIL (CGCSA) CONSUMER (SANCU)

Introduction – VC (Value Chain) - Maize 2015/16 PROCESSING HUMAN (NCM) ANIMAL FEED (AFMA) RETAIL (CGCSA) PRODUCER (SAPA) RETAIL (CGCSA) CONSUMER (SANCU) CONSUMER (SANCU) PROCESSOR (SAPA) 4 696 115 Ton 5 520 289 Ton 10 246 668 Ton

Introduction – AFMA (Cont.) NATIONAL FEED VOLUMES – 2015/16 ● AFMA members: ± 7.2 mil tons - 61% ● SA Feedlots (B & S) : ± 2.2 mil tons - 19% ● Pig Producers: ± 0.6 mil tons - 5% ● Dairy Farmers: ± 1.1 mil tons - 9% ● Other manufacturers: ± 0.6 mil tons - 6% ► Gross Turnover Value of +/- R 50 Billion

AFMA – ANIMAL FEED MANUFACTURERS ASSOCIATION ● Represents formal animal feed industry since 1945. ● Art 21 Company, voluntary – membership levy. ● 152 Members. 71 Feed Manufacturers 81 Input suppliers

Introduction – AFMA (Cont.)

Price Mechanism – Parity Prices

Price Mechanism – Parity Prices

SA Maize Competitiveness - CBOT

Price Mechanism – Parity Prices

SA Soya Competitiveness - CBOT

Yields per commodity – Ton/ha

Price Comparison – Maize & SBM 62% of Broiler Diet 24.3% of Broiler Diet

Broiler Feed Cost & Price Dynamics MAIZE = 62% INCLUSION SOYA = 24.3% INCLUSION MAIZE & SOY = 67% OF RAW MAT COST TOT. RAW MAT COST = 92-95% OF PROD. COST THUS – GLOBAL FEED PRICES DRIVEN BY RAW MAT COST

Feed Cost & Price Comparison

Potential – Maize Production

Potential – Soy Production

Potential – Soy Production

Impact of Poultry Imports 80% 26% of Local Market 80%

Impact of Poultry Imports (Cont.) DIRECT 250 000 Tons 7.3%

Impact of Poultry Imports (Cont.) FEED VOLUMES & EMPLOYMENT LOST

Impact of Poultry Imports (Cont.) LOST OPPORTUNITY OTHER - 78 000 ton Feed MDM - 780 000 ton Feed BIP - 1.3 mil ton Feed

Impact of Poultry Imports (Cont.) IMMEDIATE RISK TO THE FEED INDUSTRTY ONLY FRESH MARKET TO SURVIFE BROILER FEED VOLUMES REDUCED BY 3 MILLION TONS CLOSURE OF 31 FEED MILLS 4 650 DIRECT JOBS TO BE LOST 1.9 MILLION TON OF MAIZE NOT TO BE USED 730 000 TON SBM NOT TO BE USED – KILLING OF SOYA INDUSTRY

Mechanisms & Conclusion BROILER INDUSTRY NEGATIVELY EFFECTED BY DROUGHT AND DUMPING WTO RANGE OF INSTRUMENTS FOR PROTECTION NOT ONLY TRADE REMEDIES / ANIMAL HEALTH SAME TREATMENT FOR IMPORTS as for EXPORTS MARKET GROWTH and EXPORT DEVELOPMENT INTERVENTIONS ON POULTRY and COMMODITIES INTERVENTIONS – VALUE CHAIN APPROACH

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