April 2013 - AFMA

Benchmarking is a crucial aspect
of business – how else will you
form an idea of how you compare
to the rest of the players
in your particular industry?
With this in mind, we asked a few industry
leaders to compare the local animal feeds
industry to the rest of the world.
Terry Wiggill, Zeno Bester, Tim Horne
and Jackie Tucker from Chemuniqué
International
The South African feed industry has been
challenged this past year by a multitude of
factors. The increase in soy oilcake prices
around June/July 2012 caused an increase
in feed prices, resulting in escalated production
costs in the poultry industry in
particular.
“The South African feed
industry is proud to have
a number of world-class
nutritionists who have
years of experience in
the industry whilst keeping
abreast of international
developments in the
science of animal nutrition”
The import of “cheap” poultry meat from
countries such as Brazil meant producers
could not increase meat prices to offset the
increased feed prices and as a result, many
poultry operations suffered greatly. Much
of this can be prevented, should the government
strive to protect our local poultry
industry against imported meat produced
more cost-effectively in countries abroad
where producers are receiving government
grants.
State of the South African
animal feed industry
By Izak Hofmeyr
On a positive note, it has to be mentioned
that the South African feed industry
is on par with other feed manufacturers
and producers in the international arena.
All South African feed manufacturers are
governed by strict legislation such as the
Fertilisers, Farm Feeds, Agricultural Remedies
and Stock Remedies Act (Act 36 of 1947), and
adhere to these regulations by constantly
scrutinising and analysing feed before it
enters the food chain. An example is the
regulations on undesirable levels as stipulated
by the Feeds Act, of which all feed
manufacturers are aware, as these substances
could affect the entire feed and
food chain.
Experts and technology
South African feed manufacturers, as members
of the Animal Feed Manufacturers Association
(AFMA), are also governed by the
AFMA Code of Conduct, which ensures that
all members adhere to the strictest regulations
and implement the necessary control
measures to ensure safe feed for safe food
are produced at all times.
The South African feed industry is
proud to have a number of world-class nutritionists
who have years of experience in
the industry whilst keeping abreast of international
developments in the science of
animal nutrition. Poultry, pork, meat and
dairy producers in this country are skilled
and well informed about the nutritional
requirements of their animals, making use
of state-of-the-art modern equipment and
applying the necessary financial principles
to ensure that their operations are profitable.
These producers insist on only the
best animal feed, advice and support to
feed the nation.
However, it is unfortunate that we have
so many eager, knowledgeable producers
and feed manufacturers, but have to rely
on information and knowledge generated
abroad. A very limited amount of research
is performed within our borders and in order
for this industry to stay current, adaptable
and progressive, we need to focus on
and invest in local research to ensure we
evaluate and develop our feed products,
farming practices etc. under local conditions.
It is essential to invest in local research
to allow our feed industry to keep
up with the ever growing demand for food
in South Africa.
Effect of input cost
The continued pressure driving down margins
for livestock producers has predominantly
been due to the import of foreign
produce, relatively high raw material costs,
significant increases in electricity costs
and the recent lift in the minimum wage
within the agricultural sector. The result of
this is that many of the smaller business
operations no longer have a viable business
model, and have been forced to exit
the market.
This is particularly apparent in the dairy
sector, where over the last 20 years the
number of commercial producers has decreased
dramatically, but total cow numbers
have increased. Thus the sector is
dominated by fewer producers over time.
The other livestock production enterprises
show similar trends, and this will significantly
impact the feed industry and its interaction
with the market in the future.
Another one of the main challenges we
see facing the future of the industry, is the
distribution of agricultural land. Some of
the most productive agricultural land in
South Africa is state-owned and has been
redistributed to rural farmers. However,
the challenge is that these farmers do not
own this land to use as collateral for bank
loans and are therefore not able to use it to
its full potential.
This limits investment in possible expansion
of production buildings, purchasing
cheaper animal feed in the cities and
Feed industry
AFMA MATRIX ● APRIL 2013 7