A PROFILE OF THE SOUTH AFRICAN PORK MARKET VALUE CHAIN 214 Directorate Marketing Private Bag X 15 Arcadia 7 Tel: 12 319 8455/6 Fax: 12 319 8131 Email: MogalaM@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... 8 2.2.2. Share Analysis... 2 2.2.3. Imports... 23 3. MARKETING CHANNELS / VALUE CHAIN... 26 4. OPPORUNITIES AND CHALLENGES... 28 5. STRENGTHS AND WEAKNESSES... 28 6. MARKET INTELLIGENCE... 29 6.1. Export tariffs... 29 6.2. Import tariffs... 3 7. PERFORMANCE ANALYSISOF SOUTH AFRICAN PORK INDUSTRY IN 212... 31 7.1. Exports... 31 7.2. Imports.... 38 8. ACKNOWLEDGEMENTS... 44 2
Billion Rands 1. DESCRIPTION OF THE INDUSTRY South African pork industry is relatively large in terms of overall South African agricultural sector. It contributes around 2.15% 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 23/4 to 25/6 and increased significantly from 26/7 to 211/12 then decrease in 213. This is mainly due to an increase in prices. 4 5 4 3 5 3 2 5 2 1 5 1 5 Figure 1: Gross value of pigs slaughtered Source: Statistics and Economic Analysis, DAFF Period (Years) 1.1 Production areas Pork is produced throughout South Africa with Limpopo and North West provinces were the largest producers accounting for 44% of total production. Figure 2 below shows the production of pork per province during 213. The lowest pork producing provinces are Northern Cape (2%) and Eastern Cape (6%). 3
Figure 2: Distribution of pigs per Province in 213 Eastern Cape 6% Western Cape 11% Northern Cape 2% Free State 8% KwaZulu- Natal 1% Limpopo 24% North West 2% Mpumalanga 8% Gauteng 11% Source: Statistics and Economic Analysis, DAFF There are approximately 4 commercial producers and 19 stud breeders in South Africa. Pig numbers are estimated at 1 566 million, this is a decrease of.44% compared to 212. During 213, Limpopo province produced 24% of all pork produced in South Africa followed up by North West province with 2% then Gauteng and Western Cape provinces each having 11. KwaZulu natal province produced 1%, Mpumalanga and Free State provinces accounted for 8% each. 1.2. Production trends It is estimated that during the past decade, 24.3 million pigs were slaughtered yielding over 1.8 million tons of pork meat. Figure 3 below shows the number of pigs slaughtered and pork production from the period between 23/4 and 212/13. 4
Thousand tons Slaughtered 3 Figure 3: pork production and pig slaughtered 2 5 2 5 2 1 5 1 5 2 1 5 1 5 Slaughterings Production Source: Statistics and Economic Analysis, DAFF Figure 3 shows that pork production and pigs slaughtered moved at an increasing trend experiencing slight fluctuations during the period under review. Averagely 2.4 million pigs were slaughtered per annum for the period of 1 years and produced an average of 1.9 million tons per year. 1.3. Local consumption Figure 4 below depicts local consumption of pork comparing it to the total production for each year to determine if the country is self-sufficient in terms of pork production. 5
Thousand Tonnes 2 5 Figure 4: Pork production vs consumption 2 1 5 1 5 Source: Statistics and Economic Analysis, DAFF Figure 4 indicates that South Africa produced 2.14 million tons of pork during the 212/13 season and only 245 tons were consumed locally during the same year. It is evident on Figure 4 that South Africa s production of pork is far higher than its consumption during the period under analysis. This makes South Africa to be self-sufficient in pork. During the period under review, production volumes have been increasing although fluctuating slightly while the volumes consumed in South Africa have been relatively stable. 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 Period (Years) Production Consumption The local market is split at almost 5:5 between the fresh meat market and the processing meat market. The pork industry evolved from a highly regulated environment to one that is totally deregulated today. Various policies, such as the distinction between controlled and uncontrolled areas, compulsory levies payable by producers, restrictions on the establishment of abattoirs, the compulsory auctioning of carcasses according to grade and mass in controlled areas, the supply control via permits and quotas, the setting of floor prices, removal scheme, etc., characterised the pork industry before deregulation commenced in the early 199s. Since the deregulation of the agricultural marketing dispensation in 1997, the prices in the red meat industry are determined by demand and supply forces. 6
Rands per kg Average producer prices of pork from 22/3 to 211/12 are illustrated in Figure 5. 2. Figure 5: Average pork producer prices 16. 12. 8. 4. Period (Years) Source: Statistics and Economic Analysis, DAFF The average producer price of pork fluctuated at a decreasing trend during 23/4 to 25/6 and experienced an increasing trend with minimal fluctuations from 26/7 to 212/13. The new peak price of R 18.7 per Kg was reached during 212/13 and the lowest price of R 9.95 was experienced in 25/6. There is an increase of R 7.87/ Kg experienced in 212/13 compared to 23/4 and increased by R8.12/ Kg compared to 25/6 which was the lowest. 2.2. Import-export analysis Figure 6 compares volumes of imports and exports for pork (pork included) from 24 to 213. 7
Thousand Kilograms Figure 6: Pork exports and imports qauntities 35 3 25 2 15 1 5 24 25 26 27 28 29 21 211 212 213 Years Exports Imports Source: Quantec EasyData Figure 6 indicates that from 24 to 213, South Africa s pork exports were far less than the imports. It was only in 25 were exports increased substantially above 2 million kilograms. This means that South Africa is a net importer of pork. Most imported pork products are processed and pork ribs take the lead. 2.2.1. Exports for pork South Africa exported approximately 31.8 million kilograms of pork from 24 to 213, yielding an export value of R 27 million over the same period. The quantity and the value for exports of pork are shown in Figure 7 below. 8
Thousand Kilograms Thousand Rands Figure 7: Pork exports 25 6 2 5 15 1 5 4 3 2 1 24 25 26 27 28 29 21 211 212 213 Years Quantity Value Source: Quantec EasyData Figure 7 shows that pork exports remained lower over the past decade excluding the year 25, which displayed an outlier of more than 2 million kilograms. 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. Exports value of pork was slightly fluctuating at an increasing trend from 24 to 29 then started moving downwards from 21 to 211 before it picks up again in 212 and 213. Export value reached a peak of R52 million during 29. The export value of pork increased by R 37 million in 213 compared to 24 and decreased by R 9 million compared to 29 which was the peak. 9
Thousand Kilograms Thousand Rands Figure 8 below presents export quantities and values of pork during the same period but excludes data for 25. Figure 8: Pork exports excluding 25 3 2 5 6 5 2 1 5 1 5 24 26 27 28 29 21 211 212 213 Years 4 3 2 1 Quantity Value Source: Quantec EasyData Figure 8 shows that export quantities of pork were generally low from 24 to 27 and experienced a sharp increase in 28 before declining during the periods 29 and 211. Pork exports experienced a slight increase in 213 relative 212. Figure 9 presents volumes of pork exports to SADC during the past ten years. 1
Kilograms Kilograms 2 1 8 1 6 1 4 1 2 1 8 6 4 2 Figure 9: Pork exports from SADC 24 25 26 27 28 29 21 211 212 213 Years Angola DRC Mauritius Malawi Mozambique Seychelles United Republic of Tanzania Zambia Zimbabwe Source: Quantec EasyData 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 Zimbabwe and Mozambique. United Republic of Tanzania and Seychelles received the lowest shares of South Africa pork exports during the period under review. 8 7 6 5 4 3 2 1 Figure 1: Pork exports from Middle, Western and Eastern Africa 24 25 26 27 28 29 21 211 212 213 Years Source: Quantec EasyData Congo Gabon Ghana Kenya Nigeria Saint Helena Uganda 11
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 24 to 211 and also in 213 followed by Saint Helena and Congo at a distance. Ghana is one of the smallest importers of South African pork but it commanded the highest quantities during 212 only. Gabon was the least importer of South African pork. Figure 11: pork destination in 213 Senegal 3% Zimbabwe 11% Saint Helena 1% Zambia 13% United Arab Emirates 3% Angola 13% Mauritius 1% Democratic Republic of the Congo 3% Congo 1% Côte d'ivoire Ghana 2% 1% Liberia 1% Seychelles 3% Nigeria 2% Mozambique 29% Malawi 5% Source: Quantec EasyData It is noted that South African pork is exported within the continent, mostly to SADC countries, which constitutes 89% of the total pork exported. Mozambique is the greatest commander South African pork, leading by 29% followed by angola with 3%. United Arab Emirates from Asia, Senegal from Western Africa, Mauritius commanded 3% each Values of pork exports from various provinces of South Africa are presented in Figure 12. 12
Thousand Rands Figure 12: Values of pork exports by Provinces 35 3 25 2 15 1 5 24 25 26 27 28 29 21 211 212 213 Western Cape 3 21 2 73 974 6 219 8 522 1 782 11 654 6 47 5 1 19 672 Eastern Cape 348 46 Free State 1 151 489 22 Kwazulu-Natal 96 2 786 2 233 923 3 52 3 133 2 692 2 933 1 497 North West 4 39 188 421 Gauteng 2 35 8 589 6 459 8 368 14 198 29 75 15 954 4 215 14 29 15 152 Mpumalanga 17 2 141 235 787 1 547 387 Limpopo 518 Source: Quantec EasyData Gauteng province dominated pork exports from 24 to 213 followed Western Cape and KwaZulu Natal Provinces. This is due to the fact that these provinces are main exit points for pork and due to infrastructure developments that facilitate trade. Gauteng and Western Cape Provinces experienced their greatest exports during 29 and 21 respectively. Western can dominated exports of pork during 213. 13
Rands The following figures (Figures 13-2) show the value of pork exports from the various districts within 8 (eight) provinces of South Africa. Figure 13: Values of pork exports from Western Cape Province 25 2 15 1 5 Source: Quantec EasyData 24 25 26 27 28 29 21 211 212 213 City of Cape Town 3 721 6 2 497 4 1 811 3 8 145 7 11 655 14 462 15 592 7 219 1 5 41 2 2 634 Cape Winelands 24 6 327 466 Figure 13 indicates that City of Cape Town metropolitan municipality was a regular exporter during the past decade and experienced sharp increases from 27 to 21 and also in 213. This might be due to the fact that City of Cape Town district is the main exit point in the Western Cape. Cape Winelands district municipality recorded exports during 21 and 212 only. 14
Rands Rands Figure 14: Value of pork exports from Eastern Cape Province 5 45 4 35 3 25 2 15 1 5 24 25 26 27 28 29 21 211 212 213 Nelson Mandela 347 61 4625 Chris Hani District 29648 Source: Quantec EasyData. From Eastern Cape Province, Amatole district municipality recorded exports in 212 and 213 whereas Chris Hani district municipality recorded exports during 213 and there were no records of exports during the past from 24 to 211. 1 4 Figure 15:Values of pork exports from Free State Provinnce 1 2 1 8 6 4 2 23 24 25 26 27 28 29 21 211 212 213 Xhariep 527 53 1 211 Motheo 1 15 489 35 Source: Quantec EasyData 15
Rands From Free State Province, Motheo district municipality recorded exports of pork during the period 28 to 29 only and Xhariep district municipality recorded exports during 212 and 213. The highest exports were recorded in 213 from Xhariep district municipality. Figure 16: Vaues of pork exports from Kwazulu Natal Province 4 3 5 3 2 5 2 1 5 1 5 Source: Quantec EasyData 24 25 26 27 28 29 21 211 212 213 Ugu 6 432 651 91 776 1 Umgungundlovu 6 39 ethekwini 575 99 474 98 2 789 2 234 951 56 3 53 2 57 1 919 2 932 925 95 Uthukela 1 11 From Figure 16, exports for pork occurred mainly in ethekwini, Umgugundlovu and Ugu district municipalities. ethekwini district municipality dominated the trend with the highest values recorded in 26 and 29. This is due to the fact that ethekwini district is the main exit point in KwaZulu Natal Province. Ugu and Umgugundlovu district municipalities recorded fractional exports of pork. Umgugundlovu district municipality recorded exports in 211 only while Ugu district municipality exported during 25, and 211. UThukela district municipality only exported pork during 213 since 24. 16
Rands Figure 17: Values of pork export from North West Province 2 5 2 1 5 1 5 Source: Quantec EasyData 24 25 26 27 28 29 21 211 212 213 Bojanala 3 46 25 498 42 579 Southern 1 298 3 576 66 387 2 62 4 From North West Province, Bojanala and Southern district municipalities recorded intermittent exports for pork during the period under analysis. Bojanala district municipality recorded exports of pork during 211, 212 and 213 only and Southern district municipality exported from 29 to 212. The highest exports were recorded in 29 and 212 from Southern district municipality. 17
Rands Figure 18: Values of pork export from Gauteng Province 25 2 15 1 5 Source: Quantec EasyData 24 25 26 27 28 29 21 211 212 213 Sedibeng 915 2 687 7 223 23 35 1 634 49 5 15 2 984 Metsweding 133 27 West Rand 2 23 1 186 2 98 335 192 356 Ekurhuleni 1 29 2 578 1 245 891 3 644 1 738 2 856 1 955 5 934 6 723 City of Johannesburg 1 47 6 477 4 68 4 141 9 444 6 696 4 315 3 66 2 695 5 883 City of Tshwane 578 5 1 474 768 348 664 588 1 782 2 621 From Gauteng Province, pork exports occurred mainly in City of Johannesburg, Sedibeng and Ekurhuleni district municipalities. City of Johannesburg dominated the trend from 24 up to 28 but experiences low exports from 29 and 213. It recorded the highest exporter during the periods 25 to 28. This is due to the fact that City of Johannesburg is the main exit point to neighbouring countries of South Africa. Sedibeng district municipality performed outstandingly during 29 and 21 with an export value of R 23 million and R 1 million respectively. These records boosted the average values of Sedibeng district municipality to be the highest commander of export values during the past decade followed at a close range by City of Johannesburg metropolitan municipality then Ekurhuleni district municipality. 18
Rands Figure19: Values of pork export from Mpumalanga Province 1 2 1 8 6 4 2 Source: Quantec EasyData 24 25 26 27 28 29 21 211 212 213 Gert Sibande 126 831 576 6 Nkangala 189 7 Ehlanzeni 18 882 2 285 257 13 863 27 54 786 567 1 5 1 878 34 Figure 19 show that, all districts in Mpumalanga Province participated in pork exports during the past decade. All districts recorded fractional exports but Ehlanzeni district municipality dominated the export market. Gert Sibande district municipality recorded exports during 29 and 21 and Nkangala municipality recorded exports in 21 only. 19
Rands 1 4 Figure 2: Values of pork expots from Limpopo Province 1 2 1 8 6 4 2 Source: Quantec EasyData Vhembe district municipality from Limpopo Province, recorded small exports of pork during 21 to 211 only. 2.2.2. Share Analysis 24 25 26 27 28 29 21 211 212 213 Vhembe 2 73 1 196 94 Table 1: Share of provincial pork exports to the total RSA pork exports (%). Years Province 24 25 26 27 28 29 21 211 212 213 Western Cape 56.7 19.27 9.53 36.97 34.37 24.17 37.62 42.29 2.58 52.89 Eastern Cape 1.43.12 Free State 4.64 1.1.6 KwaZulu-Natal.1.89 27.26 13.28 3.72 7.85 1.11 18.83 12.7 4.2 North West.1.27.77 1.13 Gauteng 43.62 79.82 63.21 49.75 57.27 66.57 51.5 29.48 58.79 4.74 Mpumalanga.31.2.32.76 5.5 6.36 1.4 Limpopo 3.63. Total 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec EasyData Table 1 indicates that Gauteng province commanded the greatest share in the export of pork followed by Western Cape and KwaZulu Natal provinces. 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, Free State, North West, Mpumalanga and Limpopo provinces. 2
Table 2: Share of district pork exports to the total Western Cape provincial pork exports (%). Years District 24 25 26 27 28 29 21 211 212 213 City of Cape Town 1 1 1 1 1 1 99.85 1 94.29 1. Cape Winelands.15 5.71. Total 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec EasyData From Table 2, City of Cape Town Metropolitan municipality commanded 1% share in the export for pork from 24 to 29 and again in 211 and 213. This may be due to the fact that City of Cape Town is the main exit point for meat in the province. Cape Winelands recorded small exports value during 21 and 212. Table 3: Share of district pork exports to the total Eastern Cape provincial pork exports (%). Years 213 24 25 26 27 28 29 21 211 212 District Nelson Mandela 1 94 Chris Hani 6 6 Total 1 1 Source: Calculated from Quantec EasyData In the Eastern Cape Province, exports of pork occurred only in 212 and 213 from both district municipality. Table 4: Share of district pork exports to the total Free State provincial pork exports (%). Years District 24 25 26 27 28 29 21 211 212 213 Xhariep 1 1 Motheo 1 1 Total 1 1 1 1 Source: Calculated from Quantec EasyData Motheo district municipality commanded 1% share of pork exports value in 28 and 29 and Xhariep district municipality commanded 1% in 212 and 213. There was no pork exports recorded from 24 to 27 and from 21 to 211. 21
Table 5: Share of district pork exports to the total KwaZulu Natal provincial pork exports (%). Years District 24 25 26 27 28 29 21 211 212 213 Ugu 1.34 2.63 28.72 Umgugundlovu.24 ethekwini 1 98.66 1 1 1 1 79.37 71.5 1 47.79 Uthukhela 52.21 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 24 to 213. Intermittent exports were recorded from UGu, UThukela and UMgungundlovu district municipalities. Table 6: Share of district pork exports to the total North West provincial pork exports (%). Years District 24 25 26 27 28 29 21 211 212 213 Bojanala 4.88 1.22 1 Southern 1 1 95.12 98.78 Total 1 1 1 1 1 Source: Calculated from Quantec EasyData In North West Province, Southern and Bojanala district municipalities recorded exports of pork during the last four years of the decade. Bojanala district municipality recorded exports during 211 and 213 only and Southern district municipality recorded exports during the periods 29 to 212. Table 7: Share of district pork exports to the total Gauteng provincial pork exports (%). Years 24 25 26 27 28 29 21 211 212 District 213 Sedibeng 13.52 29.23 34.23 69.8 51.7 6.9 31.95 1.33 Metsweding 1.87 1.69.9 West Rand.61.11 3.59 1.2 4.71 1.2 4.56 Ekurhuleni 36.9 28.31 18.39 9.69 17.27 5.27 13.89 27.51 37.14 23.31 City of Johannesburg 44.86 71.13 68.8 45.4 44.76 2.29 2.98 5.74 16.87 65.69 City of Tshwane 17.63.55 16.4 3.64 1.5 3.23 8.28 11.15 5.2 Total 1 1 1 1 1 1 1 1 1 1 Source: Calculated from Quantec EasyData Table 7 indicates that City of Johannesburg metropolitan municipality commanded the greatest share in the export of pork from 24 to 28 and in 211 and 213. Sedibeng district municipality commanded the highest exports during 29 and 21 and Ekurhuleni metropolitan municipality commanded the highest only in 212. Intermittent exports of pork were recorded in Sedibeng, Metsweding, West Rand and City of Tshwane district municipalities during the periods 24 to 213. 22
Table 8: Share of district pork exports to the total Mpumalanga provincial pork exports (%). Years District 24 25 26 27 28 29 21 211 212 213 Gert Sibande 9.15 35.44 Nkangala 41.22 Ehlanzeni 1 1 1 9.85 58.78 1 64.56 1 Total 1 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 24 to 25, 27, 211 and 213. During the periods 29 to 21 exports were shared among the three district municipalities (Gert Sibande, Nkangala and Ehlanzeni). Nkangala district municipality recorded exports of pork in 21 only. Table 9: Share of district pork exports to the total Limpopo provincial pork exports (%). Years District 24 25 26 27 28 29 21 211 212 213 Vhembe 1 1 Total 1 1 Source: Calculated from Quantec EasyData Vhembe district municipality is the only municipality in Limpopo Province which participated on pork exports and commanded the greatest share in 21 and 211. There were no exports of pork recorded from 24to 29 and again in 212 and 213. 2.2.3. Imports South Africa imported approximately 27 million kilograms of pork in 212 at an estimated value of R61 million. Figure 21 below show the imports of pork from 24 to 213. 23
Million Kilograms Million Rands Figure 21: Pork imports 35 3 25 2 15 1 5 8 7 6 5 4 3 2 1 24 25 26 27 28 29 21 211 212 213 Years Quantity Value Source: Quantec EasyData Figure 21 shows that pork imports (quantity & value) increased during the previous decade. The most imported product is frozen ribs which commanded 151 million Kilograms at a value of R 2.6 billion during the period under analysis. The highest imports were recorded during the periods 25, 29, 211, 212 and 213. 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. 24
Thousand Kilograms Thousand Kilograms 18 16 14 12 1 8 6 4 2 Figure 22: Pork imports from European Union 24 25 26 27 28 29 21 211 212 213 Years Source: Quantec EasyData Belgium Germany Denmark Spain France United Kingdom Hungary Ireland Italy Netherlands Pork imports in South Africa during the past decade were dominated by France and Germany. France remained the biggest supplier from 24 to 28. Germany took over as the main supplier from 29 to 213. Belgium was the second greatest supplier from 24to 25 and it was replaced by Denmark from 26 to 27. Spain became the second highest supplier during 28 and from 211 to 213. Figure 23 presents imports of pork for North American Free Trade Agreement (NAFTA) countries. 18 16 14 12 1 8 6 4 2 Figure 23: Pork imports from South America and NAFTA 24 25 26 27 28 29 21 211 212 213 Years Brazil Canada Chile United States Source: Quantec EasyData 25
It can be observed from Figure 23 above that Brazil and Canada commanded the highest share of pork imports during the period under analysis. Brazil commanded the highest shares during the periods 24 to 25 while Canada commanded the highest shares during the period between 26 and 213. Intermittent imports of pork were recorded from Chile and United States. Figure 24 presents the various sources of South Africa s pork imports during 213. The figure indicates that in 213, Germany commanded the greatest shares of pork imports to South Africa accounting for 42% followed by Canada, which obtained 27%, and Spain by 9%. It is clear that most of pork imports are from the European Union, which accounted for 81%. Figure 24: Country of origin for pork imports in 213 United Kingdom 6% Spain 9% Denmark 2% France 4% Hungary 2% Ireland 1% Netherlands 1% United States 2% Belgium 4% Canada 27% Germany 42% Source: Quantec EasyData 3. MARKETING CHANNELS / VALUE CHAIN The pork value chain is presented in Figure 25. The value chain starts at the primary producer level. The pigs are slaughtered at abattoirs. The meat is sold 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 abattoir and processing activities him/herself. 26
Figure 25: Pork Marketing Channels Primary Producers Farmers Imports Exports Abattoirs Processors Wholesalers Retailers Butcheries CONSUMERS 27
4. OPPORUNITIES AND CHALLENGES Table 1 presents opportunities and challenges applicable to the pork industry in South Africa. Table 1: Opportunities and Challenges OPPORTUNITIES Important 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. 28
6. MARKET INTELLIGENCE 6.1. Export tariffs Tariffs that different importing countries applied to pork originating from South Africa in 212 and 213 are shown on Table 11. Table 11: Pork export tariffs 212 213 Country Angola Product Code 2311; 2312; 2319; 2321; 2322; 2329 Trade regime description Applied tariffs Total ad valorem equivalent tariff (estimated) Applied tariffs MFN Applied 1% 1% 1% 1% Total valorem equivalent tariff (estimated) ad Mozambiqu e; Democratic republic of Congo 23119; 2312; 2319; 2322; 23219; 2329; 2329 23111 & 23211 Preferential tariff for SA MFN duties 15% 7.5% 15% 7.5% 2% 15% 2% 15% United Arab Emirates 2311; 2312; 2319; 2321; 2322; 2329 MFN duties Prohibit ed Prohibited Zimbabwe 2311; 2312; 2319; 2321; 2322; 2329 MFN Applied 4% 4% 4% 4% Source: Market Access Map 29
Table 11 indicates that most of the applied tariffs in 212 remained the same as in 213. South Africa received preferential tariff rate of 15% for pork exports in Mozambique and Democratic Republic of Congo (DRC). Angola applied the lowest MFN tariff of 1% and in contrast Zimbabwe applied very restrictive MFN duties of 4% to pork originating from South Africa. South African pork was prohibited during 212 due to the outbreak of Foot and Mouth Disease (FMD). 6.2. Import tariffs Tariffs that South Africa applied to imports of pork originating from all possible countries in 212 and 213 are shown on Table 12. Table 12: Pork import tariffs Country Germany ;Canada; Spain; France, United Kingdom; &Denmar k Product Code 2311; 2312; 23199; 2321; 2322 & 23299; 23291 & 23191 Source: Market Access Map Trade regime descrip tion MFN Applied MFN Applied Applied tariff 15.% or 156./Ton whichever is the greater % 212 213 Total ad valorem equivalent tariff (estimated) 15% % Applied tariffs 15.% or 121. $/Ton whichever is the greater % Total ad valorem equivalent tariff (estimated) OTQR:15% ITQR: 7.4% % Table 12 shows that South Africa applied the same MFN tariff rates to all exporting countries. During 213 the top exporting countries of pork to South Africa were Germany, Canada, Spain, France, United Kingdom and Denmark. South Africa applied the maximum MFN tariff of 15% to HS codes 2311; 2312; 23199; 2321; 2322; 23291 & 23299 during 212 and remained the same in 213 and % to 23291 and 23191. The % MFN rates were mainly applied to fresh and frozen ribs. 3
7. PERFORMANCE ANALYSISOF SOUTH AFRICAN PORK INDUSTRY IN 212 7.1. Exports Table 13: List of importing markets for pork, fresh, chilled or frozen exported by South Africa in 213 South Africa s exports represent.6% of world exports for this Pork, fresh, chilled or frozen, its ranking in world exports is 3. Source: ITC calculations based on COMTRADE statistics. Importers Exported value 213 (USD thousand) Trade balance 213 (USD thousand ) Share in South Africa's exports (%) Export ed quantit y 213 Quantity unit Unit value (USD/unit) Trade Indicators Exported growth in value between 29-213 (%, p.a.) Exported growth in quantity between 29-213 (%, p.a.) Exported growth in value between 212-213 (%, 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 29-213 (%, p.a.) World 17483-4631 1 613 Tons 2852 18 22 376 1 6 Namibia 5965 487 34.1 2272 Tons 2625 88-13 Botswana 2635 2365 15.1 845 Tons 3118 17 1 Lesotho 2151 2151 12.3 746 Tons 2883 116 Swaziland 1888 1888 1.8 862 Tons 219 118 352 Mozambique 112 112 6.3 369 Tons 2986 35 32 17 115 15 Angola 872 872 5 174 Tons 511 65 45 75 35.4 19 Mauritius 434 434 2.5 134 Tons 3239-41 -42 32 1 2 Zimbabwe 377 377 2.2 139 Tons 2712-22 -2-63 144-2 Zambia 334 334 1.9 163 Tons 249 113 114 26 139 121 Democratic Republic of the Congo 294 294 1.7 19 Tons 2697-19 -13 21 66.1 6 Malawi 233 233 1.3 84 Tons 2774 71 12 27 147 16 Senegal 176 176 1 35 Tons 529 145 25 Seychelles 167 167 1 38 Tons 4395 79 96 626 13 19 Nigeria 162 162.9 27 Tons 6-27 -37 71 142 7 31
Ghana 151 151.9 16 Tons 9438 87 49 2 122 18 United Arab Emirates 14 14.8 33 Tons 4242 24 36-49 57.1 14 Côte d'ivoire 128 128.7 22 Tons 5818 73 23 Area Nes 77 77.4 18 Tons 4278 Liberia 67 67.4 13 Tons 5154 99 39 Saint Helena 65 65.4 16 Tons 463 9 3 3 157 21 32
Table 13 shows that during 213 South Africa exported a total of 613 tons of pork (fresh, chilled or frozen) at an average value of US$ 2852/unit. The major export destinations for pork (fresh, chilled or frozen) originating from South Africa during 213 were Namibia,Botswana, Lesotho Swaziland and and Angola. The greatest share of South African pork (fresh, chilled or frozen) exports were exported to Namibia which commanded 34.1% followed by Botswana which commanded 15.1% and Lesotho with 12.3%. South Africa s pork (fresh, chilled or frozen) exports increased by 18% in value and by 22% in quantity between the periods 29 and 213. During the same period, exports of pork (fresh, chilled or frozen) to Zimbabwe decreased by 22% in value and 2% in quantity. Mozambique increased by 35% in value and 32% in quantity while Angola increased by 65% in value and 45% in quantity during the same periods. Between the period 212 and 213, South African exports of pork (fresh, chilled or frozen) increased by 376% and exports to Zimbabwe decreased exponentially by 63% while those to Mozambique increased by 17% and Angola increased by 75% in value. 33
Figure 26: Growth in demand for pork, 213 Source: ITC Trademap 34
Growth in demand for South African pork in 213 is depicted in Figure 26. The figure illustrates that between 28 and 212; South Africa s pork (fresh, chilled or frozen) exports to, Democratic Republic of Congo (DRC) and Mauritius 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.4%. Its annual imports increased by 19% and South Africa s exports growth to Angola is 65%. At the same time, South Africa s pork (fresh, chilled or frozen) exports to United Arab Emirates (UAE),, Seychelles, Malawi and Ghana, were growing at a rate that is greater than their imports from the rest of the world. UAE, Saint Helena, Seychelles and Ghana represent gains in dynamic market and Zimbabwe represents losses in the declining market of South Africa pork (fresh, chilled or frozen) exports. Mozambique experienced the most growing demand of pork with South Africa s export annual growth of 35% and Mozambique s imports increased by 15%. 35
Figure 27: South African pork s prospects for market diversification in 213 Source: ITC Trademap 36
Figure 27 shows the prospects for market diversification for pork (fresh, chilled or frozen) exports by South Africa in 213. The analysis on the figure above shows that Botswana commanded the greatest shares of South Africa s pork (fresh, chilled or frozen) exports of 15.7% during the year 213, followed by Lesotho with 12.3%. 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.4%. The fastest growing market exists in Swaziland with the annual import growth of 335%. South Africa can either increase their market share at Czech Republic. 37
7.2. Imports. Table 14: List of supplying markets for the Pork (fresh, chilled or frozen) imported by South Africa in 213 South Africa s imports represent.21% of world exports for this Pork, fresh, chilled or frozen, its ranking in world exports is 45. Exporters Imported value 213 (USD thousand) Trade balance 213 (USD thousand) Share in South Africa's imports (%) Imported quantity 213 Quantity unit Unit value (USD/unit) Trade Indicators Imported growth in value between 29-213 (%, p.a.) Imported growth in quantity between 29-213 (%, p.a.) Imported growth in value between 212-213 (%, p.a.) Ranking of partner countries in world exports Share of partner countries in world exports (%) Total export growth in value of partner countries between 29-213 (%, p.a.) Tariff (estimated) applied by South Africa (%) World 63,514-46,31 1 27,65 Tons 2,297 1 3-27 1 8 Germany 26,475-26,475 41.7 11,456 Tons 2,311 27 21-24 1 17.3 8 8 Canada 15,668-15,668 24.7 7,24 Tons 2,175 1-8 -21 5 8.3 9 8 Spain 6,249-6,249 9.8 2,358 Tons 2,65 29 21-55 4 1.3 9 8 France 3,953-3,953 6.2 1,191 Tons 3,319-17 -26-44 8 4.1 4 8 Belgium 2,58-2,58 4.1 1,125 Tons 2,293 7-3 29 7 6.6 6 8 United Kingdom 2,254-2,254 3.5 1,459 Tons 1,545 133 171-14 16 1.1 14 8 Hungary 1,18-1,18 1.7 423 Tons 2,619 41 15 15 1.3 4 8 Namibia 1,95 4,87 1.7 564 Tons 1,941 56-21 Netherlands 1,52-1,52 1.7 384 Tons 2,74 239 98 21 6 6.7 3 8 United States of America 959-959 1.5 442 Tons 2,17 5 28 6 2 14.5 1 8 Denmark 95-95 1.4 552 Tons 1,639-8 -4-5 3 11.1 2 8 Ireland 846-846 1.3 353 Tons 2,397-14 -22-66 13 1.4 21 8 Source: ITC calculations based on COMTRADE statistics. 38
Table 14 provides a list of supplying nations for pork imported by South Africa in 213. South Africa s imports represent.21% of world imports for pork (fresh, chilled or frozen) and its ranking in world imports is 45. Table 14 shows that during 213 South Africa imported a total of 27 65 tons of pork (fresh, chilled or frozen) at an average value of US$ 2 297/unit. The major origins for pork (fresh, chilled or frozen) imported by South Africa during 212 were Germany, Canada and Spain. The greatest shares of South African pork (fresh, chilled or frozen) imports were from Germany which commanded 4% followed by Canada which commanded 24.7% and Spain which commanded 1%. These three countries constituted 76.2% of South African pork imports during 213. South Africa s pork (fresh, chilled or frozen) imports increased by 1% in value and 3% in quantity between the periods 29 and 213. During the same period, imports for pork (fresh, chilled or frozen) from Germany increased by 27% in value and 21% in quantity and imports from Canada also increased by 1% in value and decrease 8% in quantity. Between the period 212 and 213, South Africa s imports of pork (fresh, chilled or frozen) decreased by 27% in value. During the same period, imports of pork (fresh, chilled or frozen) from Germany decreased by 24% while those from Canada also decreased by 21% in value. 39
Figure 28: Competitiveness of suppliers of South Africa s pork imports in 212 Source: ITC Trademap 4
Figure 28 depicts the competitiveness of suppliers to South Africa for pork in 213. The figure illustrates that between 29 and 213 South Africa s pork (fresh, chilled or frozen) imports from the Australia Ireland Canada, France and Denmark 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 Australia, Ireland, France and Denmark decreased by 33%, 14%, 17 and 8% respectively. At the same time, South Africa s pork (fresh, chilled or frozen) imports from Germany, Canada, Spain, Italy, Belgium, Brazil and Ireland were growing at a rate that is greater than their exports to the rest of the world. The most competitive market is Germany due to its world biggest share of 17.1% and its annual import growth of 27%. 41
Figure 29: Prospects for market diversification of suppliers of pork imported by South Africa in 213 Source: ITC Trademap 42
Figure 29 illustrates prospects for diversification of suppliers of pork imported by South Africa in 213. The analysis shows that Germany, France and Spain commanded the greatest shares of South Africa s pork (fresh, chilled or frozen) imports during the year 213. Germany is the biggest supplier of pork (fresh, chilled or frozen) with a share of 41.68% in South African import market followed by Canada with an annual import growth of 24.67%, then Spain by 9.84%. Germany remains the biggest market of pork imports but if South Africa is to diversify its pork (fresh, chilled or frozen) imports, the second biggest supplier is USA with world import market share of 14.4% followed by Denmark with a world share of 11%. Germany is the best supplier of pork to South Africa; therefore South Africa can penetrate USA s export market if it wishes to diversify because USA has a South African market share of only 1.51%. Another opportunity lies in Ireland due to its highest export growth of 21%. This makes Ireland the fastest growing market in the world and it can be a target for South African pork imports. 43
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. 44