May 3, 2007

 

South Africa's producers highly optimistic on future of chicken industry

 

 

South Africa's poultry producers are now highly optimistic that the local chicken industry would grow strongly for the next few years.

 

For example, local poultry producer Sovereign Food Investments has just announced a 50-percent growth in revenues from R 458.7 million (US$65.35 million)   from R 399 million (US$ 56.9 million) the previous year.

 

The company hopes to double its chicken production in phase two of its expansion plan to 21.8 million chickens the next financial year, having completed phase one at a cost of R100 million (US$14.2 million) last year.

 

CEO Mike Davis said the company would spend R150 milion (US$21.4 million) in the second phase of its four-step expansion programme.

 

For the time being, Sovereign would concentrate on expanding its share of the domestic market, with export plans in the next four to five years.

 

Based on the at R12 billion (US$1.7 billion) estimated value of the South African chicken market, the company would be accounting for just under 5 percent of the market.

 

Consumption in the nation has grown at a healthy rate, although corn prices have risen, Davis noted. Declining fish production has also led to more demand for chicken.

 

Chicken, as a more healthy and viable source of protein was attractive to consumers. At the same time, its higher feed conversion efficiency was also attractive to producers, he said.

 

The figures definitely show an inclination towards chicken consumption in the country: beef consumption per capita has halved in the past half-century whereas poultry consumption has grown almost ten-fold.

 

Rumours of a large fast-food chain in the US looking to invest in the country has also sent a rush of businessmen eager to sink their money into new chicken farms.

 

Nando, a UK chicken restaurant chain with 250 outlets in South Africa, is now expecting to have double-digit growth every year.

 

The optimism of the industry was also exemplified by Country Bird's listing on the local stock exchange. The company, South Africa's third-largest chicken producer, hoped to raise up to R 1 billion (US$142 million) through the listing.

 

However, the trend towards organic chickens could put the pressure on battery farmers in the next few years, producers said.