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

Research Report: Addressing the Needs, Opportunities and Challenges of Cooperatives
and Collectively Owned Enterprises in the Poultry and Related Industries
The second fast food chain presents a larger barrier to entry for small abattoirs. This concern is also
represented by at least one other chain. The type of chicken cooked and sold in their stores requires
a specific cut. The chain stated that only two suppliers in South Africa have the equipment necessary
to inject and cut as per their specifications. This cut was developed by another multinational
producer.
The chain stated that there is one additional supplier who is developing the infrastructure to
produce broiler cuts to their standard. The machinery is very expensive, which is why there are so
few suppliers in the country that are able to perform this function. Although it is unlikely that any
developing farmers will be able to acquire this equipment, there may be scope for them to supply
broilers to these abattoirs.
The third fast food chain has similar concerns to the first. The contact person at this company stated
that their bird production process is very technical. He stated that small-scale farmers sometimes
approach them hoping to supply, but that only 20% of the birds they produce meet requirements.
This results in a predicament for the farmer as they have to then find an alternative buyer for the
remaining 80% of their stock. In addition to the bird size and quality requirements is a concern
regarding delivery. All suppliers deliver birds to one of three depots. Reliable vehicle fleets with
refrigeration is required for this. Small-scale abattoirs do not have the capacity to produce the
correct quality or quantities and often do not have the necessary vehicles to deliver.
Based on the interviews conducted with fast food outlets it is possible to see that very little
opportunity exists for developing cooperatives to supply to these businesses. The barriers to entry in
this area of the market are very high due to quality standards, quantities required and distribution.
Opportunity to supply to fast food chains is only possible, therefore, if co-operatives are large and
relatively successful already.
4.3. Synthesis
This chapter provides an investigation into the opportunities and challenges faced by cooperatives
and collectively owned enterprises in the poultry industry. The findings above are the result of
research into the experiences of cooperatives, industry players at large and key producers and
retailers along the value chain.
Cooperatives were surveyed on a number of elements concerning their business, challenges faced
and support. A number of features recurred throughout the results presented above. Many
cooperatives face business constraints as a result of a lack of equipment. A factor contributing
towards this is the lack of financial management and forward planning. The majority of cooperatives
do not illustrate business planning and management skills. This often results in businesses operating
hand to mouth with very little, if any, investment into their futures. A number of cooperatives had
received support from government agencies in the past. Despite this, cooperatives stated that they
require more assistance. While an inward looking analysis of cooperatives is beneficial, a better
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