1. 1 “Buy local – create a local career” 1 Presentation to the PORTFOLIO COMMITTEE: Department of Agriculture, Forestry and Fisheries By South African Poultry Association (SAPA) PARLIAMENT: CAPE TOWN 13 March 2015 1

2. 2 “Buy local – create a local career” 2 OVERVIEW OF PRESENTATION Poultry Industry in Perspective Poultry Industry Employment Industry Challenges – Trade matters – AGOA – Brining – Transformation Other issues Recommendations 2

3. 3 “Buy local – create a local career” 3 Largest agricultural sector - represents majority of broiler and eggs – Long term potential growth for both broiler meat and eggs – best value proposition for consumers – Based on international data can grow substantially and address food security as well as job creation Potential growth dependant on economic growth Broiler and egg industries going through tough times Export potential for the two industries- if fair trade conditions exist Poultry Industry in Perspective 3

4. 4 “Buy local – create a local career” 4 Broiler Industry Employment- egg industry adds another 20 000 jobs Number of employees ( including contract workers ) Junior Staff (Paterson A and B grades) Supervisory and Senior Staff (Paterson C grades and above) Total% All farming activities12 8891 59214 48125,9 Broiler Processing25 5342 03027 56421,9 Broiler Distribution4 4681 6056 0734,8 Grand Total for Direct Employees42 8915 22748 118 Grand Total for Employees in Support Industries - Indirect Employees59 73947,4 Grand Total of Direct and Indirect Employees107 857 Grand total of related field crops, i.e. white and yellow maize and soya48 509 Poultry share of related field crops18 150 Grand Total of direct and indirect employment126 007100

5. 5 “Buy local – create a local career” 5 Working closely with DAFF, the dti and Land Reform Provincial government relationships improved- GDARD PPP Relationships with junior and senior officials have improved – finding common ground Multiple meetings with Minister Zokwana and General Cele since June 2014 Much improved political support Busy resolving problems from past relationships Working Relations with Government 5

6. 6 “Buy local – create a local career” 6 Poultry now the world’s largest and most exported meat type Only 13% of production is exported and 50% of global trade value is in dark meat surpluses Total exports are worth about $ 18 billion a year 7 countries supply the bulk of the exports South Africa is the 9 th biggest importer in the world importing >20% of consumption mostly as surpluses and waste products South Africa exports <2% of production South Africa less than 2% of global production and at risk from dumped and other low cost imports from the big players We are extremely vulnerable because we eat all parts of a chicken unlike the developed world We need an enabling environment to drive further transformation TRADE MATTERS: Overview of World Trade 6

7. 7 “Buy local – create a local career” 7 Global Egg Production 7

8. 8 “Buy local – create a local career” 8 SA consumers will eat more chicken

9. 9 “Buy local – create a local career” 9 IMPORTERS & EXPORTERS Annual imports equate to 84% of largest South African company annual sales volume Positive switch in import volumes to local with EU tariffs

10. 10 “Buy local – create a local career” 10 TOTAL POULTRY IMPORTS

11. 11 “Buy local – create a local career” 11 The Product that Hurts = 40% of imports

12. 12 “Buy local – create a local career” 12 The Switch to Europe

13. 13 “Buy local – create a local career” 13 Effect of Provisional Measures

14. 14 “Buy local – create a local career” 14 Current AD application against three EU countries finalised but problematic Alternate measures to deal with the EU required – No need to accredit Poland and other EU countries to export to us TRADE MATTERS: What needs to be done 14

15. 15 “Buy local – create a local career” 15 – Strategic value of imports vs. job creation – Every 10 000 tons meat imports equates to the loss of approx. 1 000 local direct and indirect jobs – Soya growth strategy needs a strong local poultry industry – General grain market needs a strong local poultry industry – Import prices a secondary weighting to job creation – no cheap food without a job – We are job creators, importers are job destroyers TRADE MATTERS: Effect of imports on job creation: The volume effect 15

16. 16 “Buy local – create a local career” 16 Exports Opportunities for frozen broiler and shell eggs exports hampered by SPS measures and NTB’s applied to South Africa DTI driving market access issues with DIRCO and DAFF Target countries include Middle East (Bahrain, Jordan, Qatar, UAE, etc) countries and Angola SPS Risk analysis identified by the OIE PVS report as a local weakness DAFF, UP and PDMA (SAPA) working on resolving SPS regulatory requirements Extra veterinary export assistance would be appreciated 16

17. 17 “Buy local – create a local career” 17 AGOA Has been no benefit to SA poultry industry Renewal is supported by local poultry industry for national interest reasons Is a unilateral agreement so USA can basically do what they want – no reason to harm our industry and economy Local producers met US delegation in Atlanta and Washington last week to try find an acceptable concession DAFF actively involved in this exercise – Minister made aware PPC requested to support Minister Zokwana and DAFF DTI wants SAPA to USAPEEC deal i.e. industry to industry negotiation 17

18. 18 “Buy local – create a local career” 18 AGOA cont. Offer has been made to US - conditional to renewal of AGOA Quota to be linked to empowerment access In regular contact with DTI and Minister Davies Congressional decision likely in next few months 18

19. 19 “Buy local – create a local career” 19 We believe that Regulation is needed Our concerns – Technical concerns: current draft flawed – Socio- economic impacts: consumers will pay more Negative impact on nutrition and food security Potential collapse of industry Unemployment – many 000’s – Consumers are going to be the main losers Brining 19

20. 20 “Buy local – create a local career” 20 Our concerns – Misconceptions about the health impacts of brining: Product is safe DoH confirmed no health risk Compared to alternative products IQF has lowest sodium values IQF less sodium less sodium than bread – Industry uncertainty: Investment/ expansion Shrinkage Loss of employment – Lack of solid consultation – How to resolve the impasse Brining – our concerns cont. 20

21. 21 “Buy local – create a local career” 21 BRINING – how important is it to consumers? 21

22. 22 “Buy local – create a local career” 22 Improves the eating experience – Improves texture and succulence – Improves taste Makes the product cheaper Brining the most effective marinating technique Best possible price and value proposition The peoples choice What is brining?: technical and commercial effects 22

23. 23 “Buy local – create a local career” 23 The impact on consumers CURRENT 2 kg 70:30 R40.00 185g / pc 10.8 pcs NEW 2 kg 85:15 R47.24 153g / pc 13.1 pcs +20%

24. 24 “Buy local – create a local career” 24 Brined IQF is actually the cheapest chicken meat source CURRENT ADVERTISED Frozen Brined IQF Imported Leg Quarters Fresh Braai Pack Fresh Skinless Fillets VALUE PROPOSITION 70/30 Meat / Fat & SkinGrams489.7703.7 1 000.0 BonesGrams 214.3 296.3 - BrineGrams 296.0 - - - Total contentGrams 1 000.0 On shelf priceRSP kg 19.50 26.99 29.99 49.99 Excluding brine & bonesRSP kg 39.82 42.62 51.14 49.99 Protein Content per kgGrams 91.08 130.89 213.90 Protein percentage%13.94%18.60% 21.39% Protein cost per kgR/kg index 92% 98% 118%100% Composition values can vary depending on product mix and bird size Positive effect of brining -January 2015 prices 24

25. 25 “Buy local – create a local career” 25 BRINING: Market Prices 25

26. 26 “Buy local – create a local career” 26 Brining is safe All products sold locally have to be safe (FCD Act) – Brined or un-brined No evidence that current brine based marinade formulations have any health concerns 26

27. 27 “Buy local – create a local career” 27 Salt levels – a non issue Brining increases the salt (sodium) content of chicken from a low salt (sodium)product to a medium salt (sodium) product (WHO definition) Alternate price point products are all higher in sodium - except eggs IQF has less than 40% of the sodium levels of standard bread – and 1/3 of All Bran flakes 27

28. 28 “Buy local – create a local career” 28 Transformation Committee established Engagements with the dti’s BEE Unit at instruction of Minister Davies Industry commits to improving market access – several companies have good stories to tell already Can accelerate if imports/ dumping and brining issues resolved i.e. if industry more stable Working with DAFF and sector departments to set targets INDUSTRY TRANSFORMATION 28

29. 29 “Buy local – create a local career” 29 Working with DAFF to introduce new preferred breed (SASSO) Trying to partner with LEDA on Lebowakgomo abattoir Partnership with GDARD – R5million Village chicken cooperation with DAFF Looking at an equipment scheme Requesting assistance to get poultry (meat and eggs) declared designated products for government procurement Desiring a partnership to capacitate extension officers Commodity line support at national and provincial level needed INDUSTRY TRANSFORMATION: Continued 29

30. 30 “Buy local – create a local career” 30 APS Act – need to expedite production scheme amendments R 725 – industry concerns re draft revised regulation Independent Meat Inspection- – want to expedite approval – Do not support red meat position Research Chair – greatly appreciate the support of DAFF AMIE statutory levy – counterproductive in our view IDC/ BFAP competiveness study in process Municipal by-laws/ DoH National monitoring scheme developments Price and the national diet General comments 30

31. 31 “Buy local – create a local career” 31 Recommendations It is recommended that the Portfolio Committee (PC) help SAPA to maintain a national organisation for the promotion, development and guidance of the poultry industry by: –Helping enforce phytosanitary measures; –Helping ban all illegal imports and exports from the EU and elsewhere; Countries such as Australia and New Zealand have for years banned all imports –The USA currently bans SA exports of chicken for spurious SPS reasons –Encouraging DAFF to ensure compliance at all ports of entry, especially Durban 31

32. 32 “Buy local – create a local career” 32 Recommendations –Treating SAPA as genuine partners and regularly communicating with us on issues of mutual concern Helping us to improve food security, policy and legislative framework to militate against high global food prices, and market manipulation. Countries around the world protect their chicken industries for food security and employment reasons. 32

33. 33 “Buy local – create a local career” 33 Chicken and eggs the cheapest and best value for South Africans; Industry needs to be protected against foreign invasion; Industry keen on transformation; Industry not anti-brining regulations Together we can make a difference CONCLUSION 33

34. 34 “Buy local – create a local career” 34 RE A LEBOGA ENKOSI DANKIE THANK YOU 34