Assessment of Cooperatives in the Poultry Industry - 2013.pdf - Seda

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Research Report: Addressing the Needs, Opportunities and Challenges of Cooperatives and Collectively Owned Enterprises in the Poultry and Related Industries The table below illustrates the specific figures for each province. Table 2-3: Distribution of Broiler and Layer birds across South Africa PROVINCE TOTAL BROILER BIRDS % OF BROILERS TOTAL LAYER BIRDS % OF LAYERS TOTAL BIRDS % OF TOTAL EASTERN CAPE 6 875 045 6% 898 926 3% 7 773 971 6% FREESTATE 5 657 563 5% 4 675 812 18% 10 333 375 8% GAUTENG 6 961 969 6% 6 004 853 23% 12 966 822 10% KWAZULU- NATAL 16 216 891 15% 4 089 376 16% 20 306 267 15% LIMPOPO 2 557 200 2% 1 542 903 6% 4 100 103 3% MPUMALANGA 21 575 970 20% 1 273 319 5% 22 849 289 17% NORTH WEST 26 943 651 25% 2 583 712 10% 29 527 363 22% WESTERN CAPE & NORTHERN CAPE 22 775 800 21% 5 268 019 20% 28 043 819 21% The next section highlights a few of the socio-economic aspects involved in the poultry industry. The aim of this is to assess not only whether there is scope in the market for cooperatives but also whether there is social benefit associated with this and whether there are sufficient support mechanisms enabling entry into the market. 2.7. Potential The poultry industry is increasingly relevant in terms of socio-economic development, especially among previously disadvantaged South Africans. The relative affordability of poultry makes it an important source of protein for millions of low-income South Africans, thus contributing to the zero hunger ambition of the government. Small-scale farmers are common in the industry; as was shown in the ownership section; 49% of egg production is accounted for by SMME’s. However, ownership is not the only factor to consider. A large number of small-scale poultry producers conduct business informally. This contributes to employment and productivity of the sector but is largely unaccounted for. SAPA reports that an estimated 1554 smallscale farmers from previously disadvantaged communities An estimated 1554 small-scale farmers from previously disadvantaged communities have been established 19 | P a g e U r b a n - E c o n : D e v e l o p m e n t E c o n o m i s t s
Research Report: Addressing the Needs, Opportunities and Challenges of Cooperatives and Collectively Owned Enterprises in the Poultry and Related Industries have been established by government. Health trends have led to an increased demand for poultry as opposed to other meat products. Consumption of mutton and beef has declined while poultry and egg consumption continues to rise. The broiler industry is highly capital intensive and requires a long planning cycle in order to produce. This limits entrants into broiler production. Large companies dominate the poultry industry, and are able to provide required infrastructure for poultry value addition while the emerging sector requires assistance in value addition. The relative affordability of poultry makes it an important source of protein for millions of low-income South Africans, thus contributing to the zero hunger ambition of the government Cooperatives may be able to support in supply chain functions, specifically feed production (soya bean and maize), hatcheries (day-old chicks), and abattoirs (slaughtering, dressing/packaging, wholesaling and retailing). Broiler production is dominated by a few large producers. Small-scale farmers are not able to compete with the bulk costs or quality the large producers can meet. However, scope lies in the many support functions, in rural areas where there is limited access to retailers and in the value chain outside of production. A potential constraint to the growth of the domestic poultry industry is the emergence of strong international competition and insufficient tariffs to protect the local industry from the cheaper imports. If local poultry continues to be substituted by imported poultry the growth of the industry may continue to decline. Implications for the Cooperatives in the Poultry Industry: The high numbers of small-scale farmers indicates that there is scope for small organisations such as cooperatives to function within the industry Health trends indicate a potential increase in the demand for poultry Support functions and functions up and downstream in the value chain may also present opportunity for cooperatives 2.8. Support There are a number of agencies which provide support to cooperatives, in various forms, as part of their mandate. The literature review in chapter three provides information around the formation of some of these support functions. For example, the 1996 National Small Business Act gave rise to SEDA. The table below identifies organisations which provide support to cooperatives. It also details the purpose and function, main services, target group (often broader than cooperatives), and restrictions and fees. 20 | P a g e U r b a n - E c o n : D e v e l o p m e n t E c o n o m i s t s
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