A PROFILE OF THE SOUTH AFRICAN PORK MARKET VALUE CHAIN

A PROFILE OF THE SOUTH AFRICAN PORK MARKET VALUE CHAIN 215 Directorate Marketing Tel: 12 319 8455 Private Bag X 15 Fax: 12 319 8131 Arcadia E-mail:MogalaM@daff.gov.za 7 www.daff.gov.za 1

TABLE OF CONTENTS 1. DESCRIPTION OF THE INDUSTRY... 3 1.1 Production areas... 3 1.2. Production trends... 4 1.3. Local consumption... 5 1.3. Employment... 6 2. MARKET STRUCTURE... 6 2.1. Domestic market... 6 2.2. Import-export analysis... 7 2.2.1. Export for pork... 7 2.2.2. Share Analysis... 16 2.2.3. Imports... 19 3. MARKETING CHANNELS / VALUE CHAIN... 22 4. OPPORUNITIES AND CHALLENGES... 24 5. STRENGTHS AND WEAKNESSES... 24 6. MARKET INTELLIGENCE... 25 6.1. Export tariffs... 25 6.2. Import tariffs... 26 7. PERFORMANCE ANALYSISOF SOUTH AFRICAN PORK INDUSTRY IN 212... 27 7.1. Exports... 27 7.2. Imports.... 33 8. ACKNOWLEDGEMENTS... 38 2

Million Rands 1. DESCRIPTION OF THE INDUSTRY South African pork industry is relatively small in terms of overall South African agricultural sector. It contributes around 2.5% to the primary agricultural sector. The gross value of production of pork is dependent on the quantity produced and the price received by farmers. The trend in gross value follows a pattern of prices since the industry is characterized by volatile prices. The average gross value of pigs slaughtered over the past 1 years amounted to R 2.7 billion per annum. The contribution of pork to the gross value of agricultural production increased steadily from 25/6 to 213/14.This is mainly due to an increase in prices caused by increased consumption of pork. 45 4 35 3 25 2 15 1 5 Figure 1: Gross value of pigs slaughtered 24/5 25/6 26/7 27/8 28/9 29/1 21/11 211/12 212/13 213/14 Years Source: Statistics and Economic Analysis, DAFF 1.1 Production areas Pork is produced throughout South Africa. However the area where pork is produced is not necessarily were the animals are populated. Figure 2 below shows the number of pigs population per province during the year 214. The figure clearly shows that Limpopo and North West provinces were the largest producers accounting for 24% and 2% respectively. Gauteng and Western Cape followed with a share of 11% each. The provinces with lowest animal numbers are Northern Cape (2%) and Eastern Cape (6%). 3

Figure 2: Distribution of pigs per province in 214 North West 2% Western Cape 11% Northern Cape 2% Free State 8% Gauteng 11% Eastern Cape 6% KwaZulu-Natal 1% Limpopo 24% Mpumalanga 8% Source: Statistics and Economic Analysis, DAFF There are approximately 4 commercial producers and 19 stud breeders in South Africa. Pig numbers are estimated at 1.562 million for the year 214 and this is a decrease of.3% compared to 213. Noteworthy is the fact that the pig numbers in South Africa have been decreasing for the previous few years. 1.2. Production trends With the response to the increasing consumption and/or demand for pork products, the pork production has been increasing over the past decade and so has the number pigs slaughtered. Figure 3 shows the production trend in relation to the number of pigs slaughtered for the previous decade. 4

1 tons Thousand tons Slaughtered (1 ) Figure 3: Pork production and pigs slaughtered 25. 3 2. 15. 1. 5. 2 5 2 1 5 1 5. 213/14 212/13 211/12 21/11 29/1 28/9 27/8 26/7 25/6 24/5 Period (Years) Production Slaughterings Source: Statistics and Economic Analysis, DAFF As illustrated in Figure 3, from 24/5 to 213/14 both the slaughtering trend and production trend have been increasing. During the past decade, above 25 million pigs were slaughtered yielding almost 2 million tons of pork meat. For the period under analysis 2.5 million pigs were slaughtered and produced an average of 197 6 tons per year. 1.3. Local consumption Figure 4 below depicts local consumption of pork comparing it to the total production for the past decade to determine if the country is self-sufficient in terms of pork production. 3. 25. 2. 15. 1. 5.. Figure 4: Pork production vs consumption 24/5 25/6 26/7 27/8 28/9 29/1 21/11 211/12 212/13 213/14 Years Production Consumption Source: Statistics and Economic Analysis, DAFF, 215 5

Rands per Kg It is clear from Figure that South Africa consumes more pork than it produces which makes the country a net importer of pork meat. This has been the case for the period 24/5 to 212/13. During 213/14, South Africa became self-sufficient by producing 236 3 tons and consumption has slightly decreased during the period of 213/14. This may be due to price increases in this period which made the pork meat to be relatively expensive to other white meat in South Africa. 1.3. Employment Commercial pig farmers are estimated at 4, stud farmers at 19 and smallholder farmers at 1. The total number of sows is estimated at 125 sows (1 sows commercial and 25 smallholder farmers). The industry is estimated to employ about 1 workers, comprising of about 4 farm workers and 6 workers in the processing and abattoir sectors. 2. MARKET STRUCTURE 2.1. Domestic market The pork industry evolved from a highly regulated environment to one that is totally deregulated today. Since the deregulation of the agricultural marketing dispensation in 1997, the prices in the red meat industry are determined by demand and supply forces. The local market for pork is split into the fresh meat market and the processing meat market, where 45% goes to fresh market and about 55% goes to processing meat market. Average producer prices of pork from 24/5 to 213/14 are illustrated in Figure 5. 25. Figure 5: Average Pork Producer Price 2. 15. 1. 5.. 24/5 25/6 26/7 27/8 28/9 29/1 21/11 211/12 212/13 213/14 Years Source: Statistics and Economic Analysis, DAFF 6

Tons The average producer price of pork has shown an overall increasing trend for the period under consideration. The new peak price of R2.5 per kg was reached during 213/14 and the lowest price of R9.95 was experienced in 25/6. There was an increase of R 9.7/kg experienced in 213/14 from 24/5 and the price increased by R1.5/kg compared to 25/6 which was the lowest. Due to drought disaster, farmers will suffer the consequences and prices may be expected to increase. 2.2. Import-export analysis Figure 6 compares volumes of imports and exports for pork from 25 to 214. 35 3 25 2 15 1 5 Figure 6: Pork exports and imports quantities 25 26 27 28 29 21 211 212 213 214 Exports Year Imports Source: Quantec EasyData Figure 6 indicates that from 25 to 214, South Africa s pork exports were far less than the imports. It was only in 25 were exports increased substantially above 2 tons and also in 211 were exports reached almost 2 tons. This also confirms that South Africa is a net importer of pork. Both import and export trends showed instability during the period under review. However from 212 to 214 the imports are showing a steady decrease whilst exports are increasing. Most imported pork products are processed and pork ribs are the predominant imported product. 2.2.1. Exports for pork Despite the fact that South Africa is a net importer of pork, there are other pork products that are exported. South Africa exported approximately 72 12 tons of pork from 25 to 214, yielding an export value of more than R956 million over the same period. The quantity and the value for exports of pork are shown in Figure 7 below. 7

Tons Thousand rand Figure 7: South African pork exports, 25 to 214 25 2 15 1 5 25 26 27 28 29 21 211 212 213 214 Years 25 2 15 1 5 Exports Value Source: Quantec EasyData Figure 7 shows that pork exports remained lower over the past decade excluding the year 25 and 211, which displayed outliers ranging below and above 2 tons. During 25 when the export quantity was very high the export value remained low which indicates that it was less profitable to export pork in 25 than any other years. In 211, the value of export was also relatively less than other years considering the quantity exported. Export value of pork was slightly fluctuating at an increasing trend from 25 to 29, and then followed by a sharp increase from 29 to 21. From the period of 212 to 214 the value of exports showed a steady increase which indicates the worth to export pork meat in this period. The export value of pork increased from R12 million in 25 to R238 million in 214. Figure 8 below presents export quantities and values of pork during the same period but excludes data for 25 and 211. 8

Kilograms Tons Thousand rand 9 8 7 6 5 4 3 2 1 Figure 8: Pork exports excluding 25 and 211 26 27 28 29 21 212 213 214 Years 25 2 15 1 5 Exports Value Source: Quantec EasyData Figure 8 shows that export quantities of pork were generally low from 26 to 29 and experienced a sharp increase in 21. Pork exports experienced a steady increase in both quantity and value exported from 212 and 214. Figure 9 presents volumes of pork exports to SADC during the past ten years. 2 18 16 14 12 1 8 6 4 2 Figure 9: South African pork exports to SADC, 25-214 25 26 27 28 29 21 211 212 213 214 Source: Quantec EasyData Angola DRC Mauritius Malawi Mozambique Seychelles United Republic of Tanzania Zambia Zimbabwe 9

Kilograms South African pork is mainly exported to SADC countries. The highest exports of pork experienced in 28 were mainly exported to Mauritius. Mauritius commanded the greatest shares of pork exported from South Africa during the period under analysis followed by Mozambique and Zimbabwe. United Republic of Tanzania and Seychelles received the lowest shares of South Africa pork exports during the period under review. During 214, Mozambique increased its intake of South African pork by 75% within SADC from previous year. Mozambique commanded a share of 58% followed by Zimbabwe with a share of 16% and then the rest of the countries within SADC shared the remaining 26%. Figure 1: South African pork exports to Middle, Western and Eastern Africa 8 7 6 5 4 3 2 1 25 26 27 28 29 21 211 212 213 214 Years Congo Côte d'ivoire Ethiopia Ghana Kenya Nigeria Saint Helena Uganda Source: Quantec EasyData Figure 1 displays that pork produced in South Africa was mainly exported to Nigeria in Western Africa. It commanded the greatest share of South African pork from 25 to 211 and also in 213 followed by Saint Helena and Congo at a distance. Ethiopia is one of the smallest importers of South African pork but it commanded the highest quantities during 214 only. In almost all the countries presented for this region, imports had increased from 213 to 214 except Ghana. During 214, Congo was the leading importer of pork, followed by Nigeria and Saint Helena and then the rest of the countries. 1

Figure 11: South African pork destinations in 214 Zimbabwe 4% Zambia Angola 2% Mauritius 2% 2% DRC 3% Swaziland 9% Other 9% Namibia 32% Lesotho 9% Botswana 11% Mozambique 17% Source: Trade Map Figure 11 presents the destinations of South African pork exports during 214. It is noted that South African pork is exported within the continent, mostly to SADC countries, which constitutes 91% of the total pork exports. Namibia is the greatest commander of South African pork, leading by 32% followed by Mozambique with 17%, Botswana with 11%, and Lesotho and Swaziland with 9% each. Values of pork exports from various provinces of South Africa are presented in Figure 12. 11

Thousand Rands Thousand Rand 16 14 12 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 Eastern Cape 348 463 297 Free State 1152 489 385 1168 2899 Western Cape 2459 1152 1431 3262 6115 11134 6337 5596 2311 45592 Gauteng 9524 9891 17796 3168 4324 136125 128142 116749 141259 139223 KwaZulu Natal 97 327 347 278 157 8937 198 2163 1879 7255 North West 1295 42 246 Limpopo 2 1612 573 Mpumalanga 5 251 142 743 2194 98 24464 Source: Quantec EasyData Gauteng province dominated pork exports for the entire period under consideration followed by Western Cape province. This is due to the fact that these provinces are main exit points for pork and due to infrastructure developments that facilitate trade. Gauteng province experienced its greatest exports from 21 to 214. Western Cape showed immense increase of its exports of pork from 212 to 214. The following figures (Figures 13-2) show the value of pork exports from the various districts within 8 (eight) provinces of South Africa. Northern Cape is excluded from this analysis due to its zero exports of pork meat for the entire period under review. Source: Quantec EasyData Figure 12: Values of pork exports by provinces Figure 13: Values of pork exports from Western Cape province 45 4 35 3 25 2 15 1 5 25 26 27 28 29 21 211 212 213 214 City of Cape Town 2459 1152 139 3262 6115 1111 6337 5495 2311 4288 West Coast 41 Cape Wineland 24 11 354 12

Thousand Rands Thousand Rands Figure 13 indicates that the City of Cape Town metropolitan municipality was the biggest exporter during the past decade and experienced sharp increases from 27 to 21 and also from 212 to 214. This might be due to the fact that City of Cape Town is the main exit point in the Western Cape. West Coast district municipality recorded exports during 27 only. Cape Winelands indicated that it was not a regular exporter of pork during the period under review. However in 214 the district had a share of 8% of the total exports within the province. Figure 14: Value of pork exports from Eastern Cape province 5 4 3 2 1 25 26 27 28 29 21 211 212 213 214 Alfred Nzo 14 Nelson Mandela 348 463 27 Joe Gqabi 13 Source: Quantec EasyData From the Eastern Cape province, Alfred Nzo and Joe Gqabi district municipalities recorded exports only in 214 whereas Nelson Mandela district municipality recorded exports from 212 to 214. There were no records of exports during the period from 25 to 211. Source: Quantec EasyData Figure 15: Values of pork exports from Free State province 16 14 12 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 Xhariep 385 1168 262 Thabo Mofutsanyane 1152 489 656 Mangaung 14581 From Free State province, Thabo Mofutsanyane district municipality recorded exports of pork during the period 28 to 29 and again in 214 which is its highest exports. Xhariep district municipality recorded its lowest exports during 214 which represents 78% decrease from 213. Mangaung district municipality recorded exports of pork only in 214, and it was the highest exporter within the Free State province. 13

Thousand Rands Thousand Rands Source: Quantec EasyData Figure 16: Values of Pork exports from KwaZulu Natal province 9 8 7 6 5 4 3 2 1 25 26 27 28 29 21 211 212 213 214 UMgungundlovu 6 Uthukela 6 652 423 683 ethekwini 91 327 347 278 157 8285 155 2163 1879 6572 Exports of pork from KwaZulu Natal occurred mainly in ethekwini, Uthukela and Umgugundlovu district municipalities. ethekwini district municipality dominated the exports with the highest values recorded in 21 and 214. This is due to the fact that ethekwini district is the main exit point in KwaZulu Natal province. Umgugundlovu district municipality recorded exports of pork only in 211 while Uthukela district municipality exported during 21, 211 and 214. Source: Quantec EasyData Figure 17: Values of pork export from North West province 14 12 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 Bojanala 42 239 Dr Ruth Segomotsi Mompati 7 Dr Kenneth Kaunda 1295 From North West province, three district municipalities have recorded irregular exports for pork during the period under analysis. There were no exports recorded in 214. However Bojanala district municipality recorded exports of pork during 212 and 213. Dr Ruth Sogomotsi Mompati district municipality exported only in 213 whilst Dr Kenneth Kaunda recorded pork exports in 29 and it was the highest pork exports for North West for this reviewed period. 14

Thousand Rands Thousand Rands Source: Quantec EasyData Figure 18: Values of pork export from Gauteng province 14 12 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 Sedibeng 916 2691 7227 2337 1676 265 5271 298 89233 West Rand 74 4446 Ekurhuleni 1735 617 554 3848 1487 2229 1892 6338 453 1555 City of Johannesburg 7739 8358 13882 18859 17473 122 123166 11945 1326 1889 City of Tshwane 51 669 233 1244 3217 282 3121 3489 1114 From Gauteng province, pork exports occurred mainly in the City of Johannesburg, Sedibeng and Ekurhuleni district municipalities. On average, City of Johannesburg dominated the pork exports for the entire period under review. It recorded the highest exports during the period 21 to 213. However, exports from the City were followed by an 85% decline in 214. Noteworthy is the fact that City of Johannesburg is the main exit point to neighbouring countries of South Africa. Sedibeng district municipality has shown a steady increase of exports from 25 until it reached its first peak in 21 with an export value of more than R23 million. The last and highest peak reached was in 214 where the district recorded exports valued at R89.2 million. These records boosted the average values of Sedibeng district municipality to be the second highest commander of export values during the past decade following the City of Johannesburg metropolitan municipality. 25 Figure 19: Values of pork export from Mpumalanga province 2 15 1 5 25 26 27 28 29 21 211 212 213 214 Gert Sibande 237 1179 757 Ehlanzeni 5 14 142 743 115 98 2376 Source: Quantec EasyData 15

Thousand Rands Figure 19 show that district municipalities in Mpumalanga province that participated in pork exports during the past decade were Gert Sibande and Ehlanzeni. In 214 Ehlanzeni recorded pork exports worth more than R23 million which was an increase from R98 682. Gert Sibande district municipality recorded exports during 29, 212 and 214. Source: Quantec EasyData Limpopo is one of the lowest exporters of pork meat. Figure 2 shows the export trend for the past decade. Vhembe district municipality recorded exports of pork during 21 to 211 only. In 211 Limpopo reached its peak at R1.6 million through exports from Vhembe district only. Capricorn and Waterberg district municipalities have recorded pork exports only in 214. 2.2.2. Share Analysis Figure 2: Values of pork exports from Limpopo province 18 16 14 12 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 Vhembe 2 1612 Capricorn 391 Waterberg 182 Table 1: Share of provincial pork exports to the total RSA pork exports (%). Years Provinces 25 26 27 28 29 21 211 212 213 214 Eastern Cape - - - - - - -.27.28.12 Free State - - - 3.3.93 - -.3.7 8.77 Western Cape 2.35 1.13 7.31 9.36 11.56 7.12 4.57 4.39 12.22 19.13 Gauteng 78.8 87. 9.92 86.54 81.74 87.7 92.31 91.58 84.98 58.42 KwaZulu Natal.8 2.87 1.77.8 2.85 5.72 1.43 1.7 1.13 3.4 North West - - - - 2.45 - -.3.15 - Limpopo - - - - -. 1.16 - -.24 Mpumalanga.5 -. -.47.9.54 1.72.55 1.27 Total 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec EasyData 16

Table 1 indicates that Gauteng province commanded the greatest share in the export of pork followed by Western Cape province. This is mainly due to the fact that these provinces are the main exit points for pork. Fractional exports for pork were recorded in Eastern Cape, North West, and Limpopo provinces. Table 2: Share of district pork exports to the total Western Cape provincial pork exports (%). Years District 25 26 27 28 29 21 211 212 213 214 City of Cape Town 1 97.11 1 1 99.78 1 98.19 1 92.31 1 West Coast - - 2.89 - - - - - - - Cape Wineland - - - - -.22-1.81-7.69 Total 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec EasyData From Table 2, the City of Cape Town Metropolitan municipality commanded a bigger share of exports of pork from 25 to 214. This may be due to the fact that the City of Cape Town is the main exit point for meat in the province. Cape Winelands recorded small export values during 21 and 212 and West Coast also in 27. Table 3: Share of district pork exports to the total Eastern Cape provincial pork exports (%) Years District 25 26 27 28 29 21 211 212 213 214 Alfred Nzo - - - - - - - - - 4.63 Nelson Mandela - - - - - - - 1 1 91.14 Joe Gqabi - - - - - - - - - 4.24 Total 1 1 1 Source: Calculated from Quantec EasyData In the Eastern Cape province, exports of pork occurred from 212 to 214. Nelson Mandela Bay Metropolitan district occupied a bigger share of pork exports throughout the period. No exports were recorded for the period 25 to 211. Table 4: Share of district pork exports to the total Free State provincial pork exports (%) Years District 25 26 27 28 29 21 211 212 213 214 Xhariep - - - - - - - 1 1 1.25 Thabo Mofutsanyane - - - 1 1 - - - - 28.98 Mangaung - - - - - - - - - 69.77 Total 1 1 1 1 1 Source: Calculated from Quantec EasyData Thabo Mofutsanyane district municipality commanded 1% share of pork export values in 28 and 29 and Xhariep district municipality commanded 1% in 212 and 213. There were no pork exports recorded from 25 to 27 and from 21 to 211. During 214, Mangaung district commanded about 7% share of exports followed by Thabo Mofutsanyane and Xhariep with 29% and 1% respectively. 17

Table 5: Share of district pork exports to the total KwaZulu Natal provincial pork exports (%) Years 25 26 27 28 29 21 211 212 213 214 District UMgungundl - - - - - -.32 - - - ovu Uthukela 6.62 - - - - 7.29 21.38 - - 9.42 ethekwini 93.38 1 1 1 1 92.71 78.3 1 1 9.58 Total 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec EasyData In KwaZulu Natal province, ethekwini metropolitan municipality commanded the greatest share of exports of pork from 25 to 214. Intermittent exports were recorded from UThukela and UMgungundlovu district municipalities. Table 6: Share of district pork exports to the total North West provincial pork exports (%) Years District 25 26 27 28 29 21 211 212 213 214 Bojanala - 1 97.21 Dr Ruth Segomotsi Mompati 2.79 Dr Kenneth Kaunda 1 Total 1 1 1 Source: Calculated from Quantec EasyData In North West province, all district municipalities recorded irregular exports of pork during the past decade. Bojanala district municipality recorded exports during 212 and 213 only and Dr Ruth Segomotsi Mompati district municipality recorded exports only the 212 with a smaller share of 3% whilst Dr Kenneth Kaunda district municipality recorded exports only in 29 with a share of 1%. No exports were recorded in 214. Table 7: Share of district pork exports to the total Gauteng provincial pork exports (%). Years District 25 26 27 28 29 21 211 212 213 214 Sedibeng - 9.26 15.12 23.96 53.28 7.84.21 4.51 2.11 64.9 West Rand - - - - - - -.6-3.19 Ekurhuleni 18.21 6.24 3.11 12.76 3.44 1.64 1.48 5.43 3.21 11.17 City of Johannesburg 81.26 84.5 78.1 62.51 4.41 88.16 96.12 87.32 92.21 13.57 City of Tshwane.53-3.76.77 2.88 2.36 2.2 2.67 2.47 7.98 Total 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec EasyData Table 7 indicates that the City of Johannesburg metropolitan municipality commanded the greatest share in the exports of pork from 25 to 28 and from 21 to 213. Sedibeng district municipality commanded the highest exports during 29 and again in 213 and Ekurhuleni metropolitan municipality recorded regular exports for the entire period of analysis. Intermittent exports of pork were recorded in West Rand district municipality during the period 25 to 214. 18

Table 8: Share of district pork exports to the total Mpumalanga provincial pork exports (%) Years 25 26 27 28 29 21 211 212 213 214 District Gert Sibande - - - - 94.47 - - 53.74-3.1 Ehlanzeni 1 -.26-5.53 1 1 46.26 1 96.9 Total 1 1 1 1 1 1 1 Source: Calculated from Quantec EasyData From Mpumalanga province, Ehlanzeni district municipality commanded 1% share of the export of pork during the periods 25, 21, 211 and 213. During the periods 29, 212 and 214 exports were shared among the two district municipalities (Gert Sibande and Ehlanzeni). Table 9: Share of district pork exports to the total Limpopo provincial pork exports (%) Years 25 26 27 28 29 21 211 212 213 214 District Vhembe - - - - - 1 1 - - - Capricorn - - - - - - - - - 68.28 Waterberg - - - - - - - - - 31.72 Total 1 1 1 Source: Calculated from Quantec EasyData Vhembe district municipality recorded pork exports only in 21 and 211 with 1% share. From 211, exports occurred again in 214 through Capricorn and Waterberg with shares of 68% and 32% respectively. There were no exports of pork recorded from 25 to 29 and again in 212 and 213. 2.2.3. Imports South Africa imported approximately 18.5 million kilograms of pork in 214 at an estimated value of R57 million. Figure 21 below show the imports of pork from 25 to 214. 19

Tons Tons Million Rands Figure 21: South African pork imports, 25-214 35 3 25 2 15 1 5 8 7 6 5 4 3 2 1 25 26 27 28 29 21 211 212 213 214 Years Import Value Source: Quantec EasyData Figure 21 shows that pork imports (quantity and value) have been fluctuating however showing an increasing trend from 25 to 212. The pork imports have shown a decreasing trend during 213 and 214. Nevertheless during this same period the value of imports had increased relatively, thus it has been costly to import during 213 and 214 than the previous years. The most imported product is frozen ribs which accounted for 68% of total pork imports. The highest imports were recorded during 212. This is mostly driven by the increased demand of pork ribs in South Africa. Figure 22 presents pork imports from the European Union member states during the last decade. Figure 22: Pork imports from the European Union 18 16 14 12 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 Years Belgium Germany Denmark Spain France United Kingdom Hungary Ireland Italy Netherlands Source: Quantec EasyData 2

Tons Pork imports in South Africa during the past decade were dominated by France and Germany. France remained the biggest supplier from 25 to 28. Germany took over as the main supplier from 29 to 214. Belgium was the second greatest supplier in 25 and it was replaced by Denmark from 26 to 27. Spain became the second highest supplier during 28 and from 211 to 213. In 214 France outstripped Spain and became the second biggest supplier of pork to South Africa. Figure 23 presents imports of pork for North American Free Trade Agreement (NAFTA) countries. 18 Figure 23: Pork imports from South America and NAFTA 16 14 12 1 8 6 4 2 25 26 27 28 29 21 211 212 213 214 Years Canada United States Brazil Chile Source: Quantec EasyData It can be observed from Figure 23 above that Brazil and Canada commanded the highest shares of pork imports during the period under analysis. Brazil commanded the highest shares during the year 25 while Canada commanded the highest shares during the period between 26 and 214. Intermittent imports of pork were recorded from Chile and the United States. Figure 24 presents the various sources of South Africa s pork imports during 214. The figure indicates that in 214, Germany commanded the greatest share of pork imports to South Africa accounting for 54% followed by France and Spain, which both obtained 9% and Canada by 8%. It is clear that most of pork imports are from the European Union, which accounted for 9%. 21

Figure 24: ountry of origin for pork imports in 214 Belgium 5% Hungary 3% Netherlands 4% United Kingdom 5% Canada 8% Australia 1% Denmark 1% Other 1% Germany 54% Spain 9% France 9% Source: Quantec EasyData 3. MARKETING CHANNELS/VALUE CHAIN Previous studies conducted indicate that the pork value chain operates on varying levels of horizontal and vertical intergration which makes the chain a dificult structure. Many organisations function in the many levels on the chain. The pork value chain is presented in Figure 25. The chain starts at the input suppliers and value is added until the product reaches the final consumer. For the year 213/14, 254 558 tons of pig feed have been sold which is a 1.9% growth from the year 213\14. The feed for pigs mainly includes grains, fish meal, bran and premixes. The input suppliers sell the stock to primary producers and also to breeders. However breeders still sell to the primary producers too. The primary producers are mainly farmers. Farmers grow the pigs and incure the cost of production which includes feed, medicine and labour which accounts for 8% of the total cost. The pigs are slaughtered at abattoirs but the farmer can also sell to butcheries and final consumers. There are 15 abbatoirs that slaughters pigs. The abattoirs sell meat to the butchers/wholesalers/retailers/processors. The meat can be bought by consumers directly from abattoirs and/or butcheries and/or wholesalers and/or retailers. In some cases the consumer buys live pig and perform processing activities him/herself. 22

Figure 25: Pork Marketing Channels Input Supplier Breeder Imports Primary Producers Farmers Exports Abattoirs Processors Wholesalers Retailers Butcheries CONSUMERS 23

4. OPPORUNITIES AND CHALLENGES Table 1 presents opportunities and challenges applicable to the pork industry in South Africa. Table 1: Opportunities and challenges OPPORTUNITIES Supplier of quality protein for human health Industry with tremendous growth potential Pro-active in addressing consumer requirements and doing promotions Dedicated social development training programme CHALLENGES Very susceptible to world conditions and cheap imports Stiff competition both nationally and internationally Health and safety issues Phytosanitary issues Outbreak of diseases such as swine fever and Foot and Mouth Disease (FMD) 5. STRENGTHS AND WEAKNESSES Strengths The turnaround production time is quicker than red meat production. It is becoming a meat of choice. Piggeries can be established in relatively small areas. Feed costs are much lower than other meat production costs. The demand for pork meat has increased significantly over the years due to the high prices and unavailability of red meat substitutes. Weaknesses The industry is susceptible to diseases. Health, safety and phyto-sanitary issues can be inhibitive in terms of growth. Shortage of water could affect the cleaning of pens and this could be a challenge in terms of meeting the safety requirements. It is more labour intensive than the red meat industry. 24

6. MARKET INTELLIGENCE 6.1. Export tariffs Tariffs that different importing countries applied to pork originating from South Africa in 213 and 214 are shown on Table 11. Table 11: Pork export tariffs 213 214 Country Namibia Product Code 2311; 2312; 2319; 2321; 2322; 2329 Trade regime description Intra SACU rate Applied tariffs Total ad valorem equivalent tariff (estimated) Applied tariffs % % % % Total valorem equivalent tariff (estimated) ad Mozambiqu e 23119; 2312; 2319; 2322; 23219; 2329; 2329 Preferential tariff for SA 15% 15% 2% 2% 23111 and 23211 MFN duties 7.5% 7.5% 15% 15% Lesotho 2311; 2312; 23191; 2321; 2322; 2329 Intra SACU rate % % % % Botswana and Swaziland 2311; 2312; 2319; 2321; 2322; 2329 Intra SACU rate % % % % Source: Market Access Map 25

Table 11 indicates that most of the applied tariffs in 213 remained the same as in 214. South Africa received preferential tariff rate of 15% for pork exports in Mozambique. Botswana, Lesotho, Namibia and Swaziland applied free trade through Intra SACU trade. 6.2. Import tariffs Tariffs that South Africa applied to imports of pork originating from all possible countries in 213 and 214 are shown on Table 12. Table 12: Pork import tariffs Country Germany ;Canada; Spain; France, United Kingdom; Product Code 2311; 2312; 23199; 2321; 2322 and 23299; Trade regime descrip tion MFN Applied Applied tariff 15.% or 121. $/Ton whichever is the greater 213 214 Total ad valorem equivalent tariff (estimated) OTQR:15% ITQR: 7.4% Applied tariffs 15.% or 121. $/Ton whichever is the greater Total ad valorem equivalent tariff (estimated) OTQR:15% ITQR: 7.4% 23291 and 23191 MFN Applied % % % % Source: Market Access Map Table 12 shows that South Africa applied the same MFN tariff rates to all exporting countries. During 214 the top five exporting countries of pork to South Africa were Germany, Canada, Spain, France, and the United Kingdom. South Africa applied the maximum MFN tariff of 15% to HS codes 2311; 2312; 23199; 2321; 2322; 23291 and 23299 during 213 and remained the same in 214 and % to 23291 and 23191. The % MFN rates were mainly applied to fresh and frozen ribs. 26

7. PERFORMANCE ANALYSIS OF SOUTH AFRICAN PORK INDUSTRY IN 214 7.1. Exports Table 13: List of importing markets for pork, fresh, chilled or frozen exported by South Africa in 214 South Africa s exports represent.7% of world exports for this Pork, fresh, chilled or frozen, its ranking in world exports is 35. Importers Exported value 214 (USD thousand) Trade balance 214 (USD thousand) Source: ITC calculations based on COMTRADE statistics Share in South Africa's exports (%) Exported quantity 214 Quantity unit Trade Indicators Unit value (USD/unit) Exported growth in value between 21-214 (%, p.a.) Exported growth in quantity between 21-214 (%, p.a.) Exported growth in value between 213-214 (%, p.a.) Ranking of partner countries in world imports Share of partner countries in world imports (%) Total import growth in value of partner countries between 21-214 (%, p.a.) World 2218-342 1 7838 Tons 283-8 27 1 4 Namibia 6996 6996 31.5 2617 Tons 2673-9 -7 17 86-6 Mozambique 3782 3782 17.1 1489 Tons 254 5 56 243 17 124 Botswana 2498 2497 11.3 747 Tons 3344 5 2-5 11 7 Lesotho 229 229 9.1 842 Tons 241-4 15-6 115-4 Swaziland 196 196 8.8 6 Tons 3267-8 -28 4 114-6 Zimbabwe 897 897 4 44 Tons 239 11 21 138 132 23 Congo, Democratic Republic of the 658 658 3 214 Tons 375 14 8 124 62.1 23 Mauritius 535 535 2.4 143 Tons 3741-15 -12 23 1 2 Angola 493 493 2.2 95 Tons 5189 2 1-43 32.5 17 Zambia 375 375 1.7 162 Tons 2315 97 13 12 134 14 Malawi 38 38 1.4 83 Tons 3711 187 12 32 157 76 Congo 262 262 1.2 62 Tons 4226 129 86 139 69.1 126 Nigeria 227 227 1 46 Tons 4935-2 9 4 Seychelles 22 22 1 44 Tons 5 72 86 32 14 18 Hong Kong, China 157 157.7 75 Tons 293 5133 14 2.3 4 United Arab Emirates 155 155.7 24 Tons 6458-6 9 11 58.1 11 Côte d'ivoire 118 118.5 24 Tons 4917-8 81 14 27

Table 13 presents the trade indicators of importing markets for pork from South Africa in 214. During this year, South Africa exported a total of 7 838 tons of pork (fresh, chilled or frozen) valued at US$22.2 million. The major export destinations for pork (fresh, chilled or frozen) originating from South Africa during 214 were Namibia, Mozambique, Botswana, Lesotho and Swaziland. The greatest share of South African pork (fresh, chilled or frozen) exports was exported to Namibia which commanded 34.1% followed by Mozambique which commanded 17.1%, and Botswana with 11.3%. It is clear from the table that almost 95% of South African exports went to SADC countries in 214. This may be due to the benefits of regional trade agreement with South Africa that includes the no tariffs measures between member states. South Africa s pork (fresh, chilled or frozen) exports did not change in value and quantity decreased by 8% during the period of 21 and 214. During the same period, exports of pork (fresh, chilled or frozen) to Namibia, the top market, decreased by 9% in value and decreased by 7% in quantity. Swaziland decreased by 8% in value and 28% in quantity. However, Mozambique increased by 5% in value and 56% in quantity while Malawi increased by 187% in value and 12% in quantity during the same period. Between the period 213 and 214, South African exports of pork (fresh, chilled or frozen) to the world increased by 27% unlike 376% in the previous period of 212 and 213. Exports to Zimbabwe increased by 138% and those to Angola decreased by 43% in value while those to Mozambique increased by 243%, and this earned this country second position of top markets moving from position five. 28

Figure 26: Growth in demand for pork, 214 Source: ITC Trademap 29

Growth in demand for South African pork in 214 is depicted in Figure 26. The figure illustrates that between 21 and 214, South Africa s pork (fresh, chilled or frozen) exports to the Democratic Republic of Congo (DRC), Zimbabwe and United Arab Emirates (UAE) were growing at a rate that is less than their import growth from the rest of the world. Angola is the biggest market with a world share of.5%. Its annual imports increased by 17% and South Africa s exports growth to Angola is 2%. At the same time, South Africa s pork (fresh, chilled or frozen) exports to Botswana, Saint Helena, Seychelles and Malawi were growing at a rate that is greater than their imports from the rest of the world. The UAE, Saint Helena, Seychelles, Botswana and Malawi represent gains in dynamic market and Lesotho represents losses in the declining market of South Africa pork (fresh, chilled or frozen) exports. Zambia experienced the most growing demand of pork with South Africa s export annual growth of 95% and Mozambique s imports increased by 14%. 3

Figure 27: South African pork s prospects for market diversification in 214 Source: ITC Trademap 31

Figure 27 shows the prospects for market diversification for pork (fresh, chilled or frozen) exports by South Africa in 214. The analysis on the figure above shows that Namibia commanded the greatest shares of South Africa s pork (fresh, chilled or frozen) exports of 31.54% during the year 214, followed by Mozambique with 17.5%. If South Africa is to diversify its pork (fresh, chilled or frozen) exports, the biggest market exists in Angola due to its greatest world share of pork (fresh, chilled or frozen) imports of.5%. The fastest growing market exists in Zambia with the annual import growth of 335%. 32

7.2. Imports. Table 14: List of supplying markets for the Pork (fresh, chilled or frozen) imported by South Africa in 214 South Africa s imports represent.21% of world exports for this Pork, fresh, chilled or frozen, its ranking in world exports is 45. Trade Indicators Exporters Imported value 214 (USD thousand) Trade balance 214 (USD thousand) Share in South Africa's imports (%) Imported quantity 214 Quantity unit Unit value (USD/unit) Imported growth in value between 21-214 (%, p.a.) Imported growth in quantity between 21-214 Imported growth in value between 213-214 Ranking of partner countries in world exports Share of partner countries in world exports (%) Total export growth in value of partner countries World 52582-342 1 18589 Tons 2829-5 -8-17 1 5 Germany 2893-2893 53.4 1131 Tons 2773-2 -5 6 1 16 5 France 5478-5478 1.4 1719 Tons 3187-12 -16 39 9 3.5 1 Spain 489-489 9.1 164 Tons 2932-3 -5-23 3 1.7 9 Canada 3923-3917 7.5 1581 Tons 2481-21 -24-75 5 8.9 4 United Kingdom 2895-289 5.5 112 Tons 2861 146 176 28 17 1.1 1 Netherlands 2573-2573 4.9 745 Tons 3454 13 145 6 7.7 6 Belgium 2517-2517 4.8 912 Tons 276-8 -2 7 5.3 4 Hungary 1591-1591 3 515 Tons 389 38 31 44 16 1.3-2 Ireland 281-281.5 1 Tons 281-46 -48-67 12 1.5 16 Denmark 275-275.5 1 Tons 275-3 -31-7 4 1.2 Australia 117-117.2 13 Tons 9 137 64 67 22.3-6 Italy 28-28.1 3 Tons 9333 6 18.7 1 Botswana 1 2497 1 Tons 1 75 9-59 Brazil 8 4.6 3 Source: ITC calculations based on COMTRADE statistics. 33

Table 14 provides a list of supplying nations for pork imported by South Africa in 214. South Africa s imports represent.17% of world imports for pork (fresh, chilled or frozen) and its ranking in world imports is 48. Table 14 shows that during 214 South Africa imported a total of 18 589 tons of pork (fresh, chilled or frozen) worth US$52 million. The major origins for pork (fresh, chilled or frozen) imported by South Africa during 214 were Germany, France, Spain and Canada. The greatest shares of South African pork (fresh, chilled or frozen) imports were from Germany which commanded 53.4%, followed by France which commanded 1.4%, Canada with 9.1% and Spain with 7.5%. These four countries constituted 8.4% of South African pork imports during 214. South Africa s pork (fresh, chilled or frozen) imports decreased by 5% in value and 8% in quantity between the period 21 and 214. During the same period, imports for pork (fresh, chilled or frozen) from Germany decreased by 2% in value and 5% in quantity and imports from France also decreased by 12% in value and 16% in quantity. Between the period 213 and 214, South Africa s imports of pork (fresh, chilled or frozen) decreased by 17% in value. During the same period, imports of pork (fresh, chilled or frozen) from Germany and France increased by 6% and 39 respectively while those from Canada decreased by 75% in value. 34

Figure 28: Competitiveness of suppliers of South Africa s pork imports in 214 Source: ITC Trademap 35

Figure 28 depicts the competitiveness of suppliers to South Africa for pork in 214. The figure illustrates that between 21 and 214 South Africa s pork (fresh, chilled or frozen) imports from Germany, Spain, Denmark, Canada, Belgium, France and Ireland were growing at a rate that is less than their export growth to the rest of the world. It can also be noticed that South Africa s annual growth of imports from Ireland, Canada and Denmark decreased by 46%, 21% and 3% respectively. At the same time, South Africa s pork (fresh, chilled or frozen) imports from Hungary, United Kingdom and Australia were growing at a rate that is greater than their exports to the rest of the world. The most competitive market is Hungary due to its world share of 1.3% and its annual import growth of 38%. 36

Figure 29: Prospects for market diversification of suppliers of pork imported by South Africa in 214 Source: ITC Trademap 37

Figure 29 illustrates prospects for diversification of suppliers of pork imported by South Africa in 214. The analysis show that Germany, France and Spain commanded the greatest shares of South Africa s pork (fresh, chilled or frozen) imports during the year 214. Germany is the biggest supplier of pork (fresh, chilled or frozen) with a share of 53.43% in South African import market followed by France with an annual import growth of 9.2%, and then Spain with 9.15%. Germany remains the biggest market of pork imports in the world, followed by Spain with world import market share of 1.7 %, followed by Denmark with a world share of 1.2%. Germany is the best supplier of pork to South Africa. 8. ACKNOWLEDGEMENTS The following organizations are acknowledged: Directorate: Statistics and Economic Analysis. www.daff.gov.za Quantec Easydata www.easydata.co.za ITC Market Access Map http://www.macmap.org/southafrica ITC Trade Map http://www.trademap.org. Disclaimer: This document and its contents have been compiled by the Department of Agriculture, Forestry and Fisheries for the purpose of detailing the Pork value chain. Anyone who uses the information as contained in this document does so at his/her own risk. The views expressed in this document are those of the Department of Agriculture, Forestry and Fisheries with regard to the industry, unless otherwise stated. The Department of Agriculture, Forestry and Fisheries therefore accepts no liability that can be incurred resulting from the use of this information. 38