PORK MARKET VALUE CHAIN PROFILE · 2015. 5. 21. · It is estimated that during the past decade, 24.3 million pigs were slaughtered yielding over 1.8 million tons of pork meat. Figure

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A PROFILE OF THE SOUTH AFRICAN PORK MARKET VALUE CHAIN

2014

Directorate Marketing Private Bag X 15

Arcadia 0007

Tel: 012 319 8455/6 Fax: 012 319 8131

Email: [email protected]

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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 .............................................................................................................................. 20 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 .......................................................................................................................................... 30 7. PERFORMANCE ANALYSISOF SOUTH AFRICAN PORK INDUSTRY IN 2012 .................................. 31

7.1. Exports ................................................................................................................................................. 31 7.2. Imports. ................................................................................................................................................. 38

8. ACKNOWLEDGEMENTS ....................................................................................................................... 44

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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 10 years amounted to R 2.7 billion per annum. The contribution of pork to the gross value of agricultural production increased steadily from 2003/04 to 2005/06 and increased significantly from 2006/07 to 2011/12 then decrease in 2013. This is mainly due to an increase in prices.

Source: Statistics and Economic Analysis, DAFF

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 2013. The lowest pork producing provinces are Northern Cape (2%) and Eastern Cape (6%).

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Figure 1: Gross value of pigs slaughtered

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There are approximately 4000 commercial producers and 19 stud breeders in South Africa. Pig numbers are estimated at 1 566 million, this is a decrease of 0.44% compared to 2012. During 2013, Limpopo province produced 24% of all pork produced in South Africa followed up by North West province with 20% then Gauteng and Western Cape provinces each having 11. KwaZulu natal province produced 10%, 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 2003/04 and 2012/13.

Northern Cape

2% Free State 8%

KwaZulu-

Natal 10%

North West

20%

Gauteng 11% Mpumalanga

8%

Limpopo 24%

Western Cape

11%

Eastern Cape

6%

Figure 2: Distribution of pigs per Province in 2013

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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 10 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.

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Slaughterings Production

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Source: Statistics and Economic Analysis, DAFF Figure 4 indicates that South Africa produced 2.14 million tons of pork during the 2012/13 season and only 245 000 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 4000, stud farmers at 19 and smallholder farmers at 100. The total number of sows is estimated at 125 000 sows (100 000 sows commercial and 25 000 smallholder farmers). The industry is estimated to employ about 10 000 workers, comprising of about 4 000 farm workers and 6 000 workers in the processing and abattoir sectors. 2. MARKET STRUCTURE 2.1. Domestic market The local market is split at almost 50:50 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 1990s. Since the deregulation of the agricultural marketing dispensation in 1997, the prices in the red meat industry are determined by demand and supply forces.

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Figure 4: Pork production vs consumption

Production Consumption

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Average producer prices of pork from 2002/03 to 2011/12 are illustrated in Figure 5.


The average producer price of pork fluctuated at a decreasing trend during 2003/04 to 2005/06 and experienced an increasing trend with minimal fluctuations from 2006/07 to 2012/13. The new peak price of R 18.07 per Kg was reached during 2012/13 and the lowest price of R 9.95 was experienced in 2005/06. There is an increase of R 7.87/ Kg experienced in 2012/13 compared to 2003/04 and increased by R8.12/ Kg compared to 2005/06 which was the lowest. 2.2. Import-export analysis Figure 6 compares volumes of imports and exports for pork (pork included) from 2004 to 2013.

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Figure 5: Average pork producer prices

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Source: Quantec EasyData

Figure 6 indicates that from 2004 to 2013, South Africa’s pork exports were far less than the imports. It was only in 2005 were exports increased substantially above 20 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 2004 to 2013, yielding an export value of R 270 million over the same period. The quantity and the value for exports of pork are shown in Figure 7 below.

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Figure 6: Pork exports and imports qauntities

Exports Imports

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Figure 7 shows that pork exports remained lower over the past decade excluding the year 2005, which displayed an outlier of more than 20 million kilograms. During 2005 when the export quantity was very high the export value remained low which indicates that it was less profitable to export pork in 2005 than any other years. Exports value of pork was slightly fluctuating at an increasing trend from 2004 to 2009 then started moving downwards from 2010 to 2011 before it picks up again in 2012 and 2013. Export value reached a peak of R52 million during 2009. The export value of pork increased by R 37 million in 2013 compared to 2004 and decreased by R 9 million compared to 2009 which was the peak.

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Figure 7: Pork exports

Quantity Value

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Figure 8 below presents export quantities and values of pork during the same period but excludes data for 2005.


Figure 8 shows that export quantities of pork were generally low from 2004 to 2007 and experienced a sharp increase in 2008 before declining during the periods 2009 and 2011. Pork exports experienced a slight increase in 2013 relative 2012. Figure 9 presents volumes of pork exports to SADC during the past ten years.

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Figure 8: Pork exports excluding 2005

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South African pork is mainly exported to SADC countries. The highest exports of pork experienced in 2008 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.


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Figure 9: Pork exports from SADC

Angola DRC Mauritius

Malawi Mozambique Seychelles

United Republic of Tanzania Zambia Zimbabwe

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Figure 10: Pork exports from Middle, Western and Eastern Africa

Congo Gabon Ghana Kenya Nigeria Saint Helena Uganda

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Figure 10 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 2004 to 2011 and also in 2013 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 2012 only. Gabon was the least importer of South African pork.


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 30%. 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.

United Arab Emirates

3%

Angola 13%

Democratic Republic of the Congo

3% Congo

1% Côte d'Ivoire

2% Ghana 1%

Liberia 1%

Mauritius 10%

Malawi 5%

Mozambique 29% Nigeria

2%

Seychelles 3%

Senegal 3%

Zimbabwe 11%

Zambia 13%

Saint Helena 1%

Figure 11: pork destination in 2013

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Gauteng province dominated pork exports from 2004 to 2013 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 2009 and 2010 respectively. Western can dominated exports of pork during 2013.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Western Cape 3 021 2 073 974 6 219 8 522 10 782 11 654 6 047 5 001 19 672

Eastern Cape 0 0 0 0 0 0 0 0 348 46

Free State 0 0 0 0 1 151 489 0 0 0 22

Kwazulu-Natal 0 96 2 786 2 233 923 3 502 3 133 2 692 2 933 1 497

North West 0 0 0 0 0 0 4 39 188 421

Gauteng 2 350 8 589 6 459 8 368 14 198 29 705 15 954 4 215 14 290 15 152

Mpumalanga 17 2 0 0 0 141 235 787 1 547 387

Limpopo 0 0 0 0 0 0 0 518 0 0

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Figure 12: Values of pork exports by Provinces

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The following figures (Figures 13 - 20) show the value of pork exports from the various districts within 8 (eight) provinces of South Africa.


Figure 13 indicates that City of Cape Town metropolitan municipality was a regular exporter during the past decade and experienced sharp increases from 2007 to 2010 and also in 2013. 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 2010 and 2012 only.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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 5 410 2 20 634

Cape Winelands 0 0 0 0 0 0 24 006 0 327 466 0

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Figure 13: Values of pork exports from Western Cape Province

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Source: Quantec EasyData.

From Eastern Cape Province, Amatole district municipality recorded exports in 2012 and 2013 whereas Chris Hani district municipality recorded exports during 2013 and there were no records of exports during the past from 2004 to 2011.


2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Nelson Mandela 0 0 0 0 0 0 0 0 347 610 462500

Chris Hani District 0 0 0 0 0 0 0 0 0 29648

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Figure 14: Value of pork exports from Eastern Cape Province

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Xhariep 0 0 0 0 0 0 0 0 0 527 53 1 211

Motheo 0 0 0 0 0 1 150 489 35 0 0 0 0

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Figure 15:Values of pork exports from Free State Provinnce

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From Free State Province, Motheo district municipality recorded exports of pork during the period 2008 to 2009 only and Xhariep district municipality recorded exports during 2012 and 2013. The highest exports were recorded in 2013 from Xhariep district municipality.


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 2006 and 2009. 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 2011 only while Ugu district municipality exported during 2005, and 2011. UThukela district municipality only exported pork during 2013 since 2004.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Ugu 0 6 432 0 0 0 0 651 91 776 10 0 0

Umgungundlovu 0 0 0 0 0 0 0 6 390 0 0

eThekwini 575 99 474 98 2 789 2 234 951 56 3 503 2 507 1 919 2 932 925 95

Uthukela 0 0 0 0 0 0 0 0 0 1 011

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Figure 16: Vaues of pork exports from Kwazulu Natal Province

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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 2011, 2012 and 2013 only and Southern district municipality exported from 2009 to 2012. The highest exports were recorded in 2009 and 2012 from Southern district municipality.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Bojanala 0 0 0 0 0 0 0 3 406 25 498 420 579

Southern 0 0 0 0 0 1 298 0 3 576 66 387 2 062 4 0

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From Gauteng Province, pork exports occurred mainly in City of Johannesburg, Sedibeng and Ekurhuleni district municipalities. City of Johannesburg dominated the trend from 2004 up to 2008 but experiences low exports from 2009 and 2013. It recorded the highest exporter during the periods 2005 to 2008. 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 2009 and 2010 with an export value of R 23 million and R 10 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.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Sedibeng 0 0 915 2 687 7 223 23 035 10 634 490 5 105 2 984

Metsweding 0 0 0 0 0 0 0 133 270 0

West Rand 20 0 0 0 23 1 186 2 098 335 192 356

Ekurhuleni 1 209 2 578 1 245 891 3 644 1 738 2 856 1 955 5 934 6 723

City of Johannesburg 1 470 6 477 4 608 4 141 9 444 6 696 4 315 3 606 2 695 5 883

City of Tshwane 578 50 0 1 474 768 348 664 588 1 782 2 621

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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 2009 and 2010 and Nkangala municipality recorded exports in 2010 only.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gert Sibande 0 0 0 0 0 126 831 0 0 576 600 0

Nkangala 0 0 0 0 0 0 189 700 0 0 0

Ehlanzeni 18 882 2 285 0 257 0 13 863 270 504 786 567 1 050 1 878 034

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Vhembe district municipality from Limpopo Province, recorded small exports of pork during 2010 to 2011 only. 2.2.2. Share Analysis Table 1: Share of provincial pork exports to the total RSA pork exports (%).

Years Province

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Western Cape 56.07 19.27 9.53 36.97 34.37 24.17 37.62 42.29 20.58 52.89

Eastern Cape 0 0 0 0 0 0 0 0 1.43 0.12

Free State 0 0 0 0 4.64 1.10 0 0 0 0.06

KwaZulu-Natal 0.01 0.89 27.26 13.28 3.72 7.85 10.11 18.83 12.07 4.02

North West 0 0 0 0 0 0 0.01 0.27 0.77 1.13

Gauteng 43.62 79.82 63.21 49.75 57.27 66.57 51.50 29.48 58.79 40.74

Mpumalanga 0.31 0.02 0 0 0 0.32 0.76 5.50 6.36 1.04

Limpopo 0 0 0 0 0 0 0 3.63 0 0.00

Total 100 100 100 100 100 100 100 100 100 100 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.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Vhembe 0 0 0 0 0 0 2 073 1 196 940 0 0

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Figure 20: Values of pork expots from Limpopo Province

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Table 2: Share of district pork exports to the total Western Cape provincial pork exports (%).

Years District

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

City of Cape Town 100 100 100 100 100 100 99.85 100 94.29 100.0

Cape Winelands 0 0 0 0 0 0 0.15 0 5.71 0.0


From Table 2, City of Cape Town Metropolitan municipality commanded 100% share in the export for pork from 2004 to 2009 and again in 2011 and 2013. 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 2010 and 2012. Table 3: Share of district pork exports to the total Eastern Cape provincial pork exports (%).

Years District

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Nelson Mandela 0 0 0 0 0 0 0 0 100 94

Chris Hani 0 0 0 0 0 0 0 0 6 6


In the Eastern Cape Province, exports of pork occurred only in 2012 and 2013 from both district municipality. Table 4: Share of district pork exports to the total Free State provincial pork exports (%).

Years District

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Xhariep 0 0 0 0 0 0 0 0 100 100

Motheo 0 0 0 0 100 100 0 0 0 0

Total 0 0 0 0 100 100 0 0 100 100

Source: Calculated from Quantec EasyData

Motheo district municipality commanded 100% share of pork exports value in 2008 and 2009 and Xhariep district municipality commanded 100% in 2012 and 2013. There was no pork exports recorded from 2004 to 2007 and from 2010 to 2011.

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Table 5: Share of district pork exports to the total KwaZulu–Natal provincial pork exports (%).

Years District

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Ugu 0 1.34 0 0 0 0 20.63 28.72 0 0

Umgugundlovu 0 0 0 0 0 0 0 0.24 0 0

eThekwini 100 98.66 100 100 100 100 79.37 71.05 100 47.79

Uthukhela 0 0 0 0 0 0 0 0 0 52.21


In KwaZulu–Natal Province, eThekwini metropolitan municipality commanded the greatest share of exports of pork from 2004 to 2013. 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

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Bojanala 0 0 0 0 0 0 0 4.88 1.22 100

Southern 0 0 0 0 0 100 100 95.12 98.78 0

Total 0 0 0 0 0 100 100 100 100 100


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 2011 and 2013 only and Southern district municipality recorded exports during the periods 2009 to 2012. Table 7: Share of district pork exports to the total Gauteng provincial pork exports (%).

Years District

2004 2005 2006 2007 2008 2009 2010 2011 2012

2013

Sedibeng 0 0 13.52 29.23 34.23 69.80 51.70 6.90 31.95 1.33

Metsweding 0 0 0 0 0 0 0 1.87 1.69 0.09

West Rand 0.61 0 0 0 0.11 3.59 10.20 4.71 1.20 4.56

Ekurhuleni 36.90 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 68.08 45.04 44.76 20.29 20.98 50.74 16.87 65.69

City of Tshwane 17.63 0.55 0 16.04 3.64 1.05 3.23 8.28 11.15 5.02


Table 7 indicates that City of Johannesburg metropolitan municipality commanded the greatest share in the export of pork from 2004 to 2008 and in 2011 and 2013. Sedibeng district municipality commanded the highest exports during 2009 and 2010 and Ekurhuleni metropolitan municipality commanded the highest only in 2012. Intermittent exports of pork were recorded in Sedibeng, Metsweding, West Rand and City of Tshwane district municipalities during the periods 2004 to 2013.

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Table 8: Share of district pork exports to the total Mpumalanga provincial pork exports (%).

Years District

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gert Sibande 0 0 0 0 0 90.15 0 0 35.44 0

Nkangala 0 0 0 0 0 0 41.22 0 0 0

Ehlanzeni 100 100 0 100 0 9.85 58.78 100 64.56

100

Total 100 100 0 100 0 100 100 100 100 100


From Mpumalanga province, Ehlanzeni district municipality commanded 100% share of the export of pork during the periods 2004 to 2005, 2007, 2011 and 2013. During the periods 2009 to 2010 exports were shared among the three district municipalities (Gert Sibande, Nkangala and Ehlanzeni). Nkangala district municipality recorded exports of pork in 2010 only. Table 9: Share of district pork exports to the total Limpopo provincial pork exports (%).

Years District

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Vhembe 0 0 0 0 0 0 100 100 0 0


Vhembe district municipality is the only municipality in Limpopo Province which participated on pork exports and commanded the greatest share in 2010 and 2011. There were no exports of pork recorded from 2004to 2009 and again in 2012 and 2013.

2.2.3. Imports South Africa imported approximately 27 million kilograms of pork in 2012 at an estimated value of R601 million. Figure 21 below show the imports of pork from 2004 to 2013.

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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 2005, 2009, 2011, 2012 and 2013. 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.

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Figure 21: Pork imports

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Pork imports in South Africa during the past decade were dominated by France and Germany. France remained the biggest supplier from 2004 to 2008. Germany took over as the main supplier from 2009 to 2013. Belgium was the second greatest supplier from 2004to 2005 and it was replaced by Denmark from 2006 to 2007. Spain became the second highest supplier during 2008 and from 2011 to 2013. Figure 23 presents imports of pork for North American Free Trade Agreement (NAFTA) countries.


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Figure 22: Pork imports from European Union

Belgium Germany Denmark Spain France United Kingdom Hungary Ireland Italy Netherlands

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Figure 23: Pork imports from South America and NAFTA

Brazil Canada Chile United States

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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 2004 to 2005 while Canada commanded the highest shares during the period between 2006 and 2013. Intermittent imports of pork were recorded from Chile and United States. Figure 24 presents the various sources of South Africa’s pork imports during 2013. The figure indicates that in 2013, 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%.


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.

Belgium 4%

Canada 27%

Germany 42%

Denmark 2%

Spain 9%

France 4%

United Kingdom 6%

Hungary 2%

Ireland 1%

Netherlands 1%

United States 2%

Figure 24: Country of origin for pork imports in 2013

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Figure 25: Pork Marketing Channels

Primary Producers – Farmers

Abattoirs

Wholesalers

Retailers Butcheries

Processors

Imports

CONSUMERS

Exports

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4. OPPORUNITIES AND CHALLENGES Table 10 presents opportunities and challenges applicable to the pork industry in South Africa. Table 10: Opportunities and Challenges

OPPORTUNITIES CHALLENGES

Important supplier of quality protein for human health

Very susceptible to world conditions and cheap imports

Industry with tremendous Growth Potential Stiff competition both nationally and internationally

Pro-active in addressing consumer requirements and doing promotions

Health and safety issues

Dedicated social development training programme 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.

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6. MARKET INTELLIGENCE

6.1. Export tariffs Tariffs that different importing countries applied to pork originating from South Africa in 2012 and 2013 are shown on Table 11. Table 11: Pork export tariffs

Country Product Code

Trade regime description

2012 2013

Applied tariffs

Total ad valorem equivalent tariff (estimated)

Applied tariffs


Angola

02031100; 02031200; 02031900; 02032100; 02032200; 02032900

MFN Applied

10%

10%

10%

10%

Mozambique; Democratic republic of Congo

02031190; 02031200; 02031900; 02032200; 02032190; 02032900; 02032900 02031110 & 02032110

Preferential tariff for SA MFN duties

15% 7.50%

15% 7.50%

20% 15%

20% 15%

United Arab Emirates

0203110000; 0203120000; 0203190000; 0203210000; 0203220000; 0203290000

MFN duties Prohibited

Prohibited

Zimbabwe

02031100; 02031200; 02031900; 02032100; 02032200; 02032900

MFN Applied 40% 40% 40% 40%

Source: Market Access Map

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Table 11 indicates that most of the applied tariffs in 2012 remained the same as in 2013. 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 10% and in contrast Zimbabwe applied very restrictive MFN duties of 40% to pork originating from South Africa. South African pork was prohibited during 2012 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 2012 and 2013 are shown on Table 12. Table 12: Pork import tariffs

Country Product Code

Trade regime description

2012 2013

Applied tariff Total ad valorem equivalent tariff (estimated)

Applied tariffs


Germany;Canada;Spain; France, United Kingdom; &Denmark

02031100; 02031200; 02031990; 02032100; 02032200& 02032990; 02032910 & 02031910

MFN Applied MFN Applied

15.00% or 156.00/Ton whichever is the greater 0%

15% 0%

15.00% or 121.00 $/Ton whichever is the greater 0%

OTQR:15% ITQR: 7.4% 0%

Source: Market Access Map

Table 12 shows that South Africa applied the same MFN tariff rates to all exporting countries. During 2013 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 02031100; 02031200; 02031990; 02032100; 02032200; 02032910 & 02032990 during 2012 and remained the same in 2013 and 0% to 02032910 and 02031910. The 0% MFN rates were mainly applied to fresh and frozen ribs.

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7. PERFORMANCE ANALYSISOF SOUTH AFRICAN PORK INDUSTRY IN 2012

7.1. Exports Table 13: List of importing markets for pork, fresh, chilled or frozen exported by South Africa in 2013 South Africa’s exports represent 0.06% of world exports for this Pork, fresh, chilled or frozen, its ranking in world exports is 30. Source: ITC calculations based on COMTRADE statistics.

Importers

Trade Indicators

Exported value 2013

(USD thousand)

Trade balance

2013 (USD

thousand)

Share in South

Africa's exports

(%)

Exported

quantity 2013

Quantity unit

Unit value (USD/unit)

Exported growth in

value between

2009-2013 (%, p.a.)

Exported growth in quantity between

2009-2013 (%, p.a.)

Exported growth in value between 2012-2013 (%, 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

2009-2013 (%, p.a.)

World 17483 -46031 100 6130 Tons 2852 18 22 376 100 6

Namibia 5965 4870 34.1 2272 Tons 2625 88 0 -13

Botswana 2635 2365 15.1 845 Tons 3118 107 0 10

Lesotho 2151 2151 12.3 746 Tons 2883 116 0

Swaziland 1888 1888 10.8 862 Tons 2190 118 0 352

Mozambique 1102 1102 6.3 369 Tons 2986 35 32 17 115 0 105

Angola 872 872 5 174 Tons 5011 65 45 75 35 0.4 19

Mauritius 434 434 2.5 134 Tons 3239 -41 -42 302 100 0 2

Zimbabwe 377 377 2.2 139 Tons 2712 -22 -20 -63 144 0 -20

Zambia 334 334 1.9 163 Tons 2049 113 114 206 139 0 121

Democratic Republic of the Congo 294 294 1.7 109 Tons 2697 -19 -13 21 66 0.1 6

Malawi 233 233 1.3 84 Tons 2774 71 102 270 147 0 16

Senegal 176 176 1 35 Tons 5029 145 0 25

Seychelles 167 167 1 38 Tons 4395 79 96 626 103 0 19

Nigeria 162 162 0.9 27 Tons 6000 -27 -37 710 142 0 7

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Ghana 151 151 0.9 16 Tons 9438 87 49 2 122 0 18

United Arab Emirates 140 140 0.8 33 Tons 4242 24 36 -49 57 0.1 14

Côte d'Ivoire 128 128 0.7 22 Tons 5818 73 0 23

Area Nes 77 77 0.4 18 Tons 4278

Liberia 67 67 0.4 13 Tons 5154 99 0 39

Saint Helena 65 65 0.4 16 Tons 4063 9 3 30 157 0 21

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Table 13 shows that during 2013 South Africa exported a total of 6130 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 2013 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 2009 and 2013. During the same period, exports of pork (fresh, chilled or frozen) to Zimbabwe decreased by 22% in value and 20% 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 2012 and 2013, 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.

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Figure 26: Growth in demand for pork, 2013

Source: ITC Trademap

35

Growth in demand for South African pork in 2013 is depicted in Figure 26. The figure illustrates that between 2008 and 2012; 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 0.4%. 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 105%.

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Figure 27: South African pork’s prospects for market diversification in 2013


37

Figure 27 shows the prospects for market diversification for pork (fresh, chilled or frozen) exports by South Africa in 2013. The analysis on the figure above shows that Botswana commanded the greatest shares of South Africa’s pork (fresh, chilled or frozen) exports of 15.07% during the year 2013, followed by Lesotho with 12.03%. 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 0.4%. 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.

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7.2. Imports. Table 14: List of supplying markets for the Pork (fresh, chilled or frozen) imported by South Africa in 2013 South Africa’s imports represent 0.21% of world exports for this Pork, fresh, chilled or frozen, its ranking in world exports is 45.

Exporters

Trade Indicators Tariff

(estimated) applied by

South Africa (%)

Imported value 2013

(USD thousand)

Trade balance 2013 (USD thousand)

Share in South

Africa's imports (%)

Imported quantity

2013

Quantity unit

Unit value (USD/unit)

Imported growth in value between 2009-2013 (%, p.a.)

Imported growth in quantity

between 2009-2013 (%, p.a.)

Imported growth in value between 2012-2013 (%, 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 2009-2013 (%, p.a.)

World 63,514 -46,031 100 27,650 Tons 2,297 10 3 -27 100 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 7,204 Tons 2,175 1 -8 -21 5 8.3 9 8

Spain 6,249 -6,249 9.8 2,358 Tons 2,650 29 21 -55 4 10.3 9 8

France 3,953 -3,953 6.2 1,191 Tons 3,319 -17 -26 -44 8 4.1 4 8

Belgium 2,580 -2,580 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 1,108 -1,108 1.7 423 Tons 2,619 41 15 15 1.3 4 8

Namibia 1,095 4,870 1.7 564 Tons 1,941 56 0 -21 0

Netherlands 1,052 -1,052 1.7 384 Tons 2,740 239 98 21 6 6.7 3 8

United States of America 959 -959 1.5 442 Tons 2,170 50 28 60 2 14.5 10 8

Denmark 905 -905 1.4 552 Tons 1,639 -8 -4 -50 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.

39

Table 14 provides a list of supplying nations for pork imported by South Africa in 2013. South Africa’s imports represent 0.21% of world imports for pork (fresh, chilled or frozen) and its ranking in world imports is 45. Table 14 shows that during 2013 South Africa imported a total of 27 650 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 2012 were Germany, Canada and Spain. The greatest shares of South African pork (fresh, chilled or frozen) imports were from Germany which commanded 40% followed by Canada which commanded 24.7% and Spain which commanded 10%. These three countries constituted 76.2% of South African pork imports during 2013. South Africa’s pork (fresh, chilled or frozen) imports increased by 10% in value and 3% in quantity between the periods 2009 and 2013. 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 2012 and 2013, 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.

40

Figure 28: Competitiveness of suppliers of South Africa’s pork imports in 2012


41

Figure 28 depicts the competitiveness of suppliers to South Africa for pork in 2013. The figure illustrates that between 2009 and 2013 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%.

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Figure 29: Prospects for market diversification of suppliers of pork imported by South Africa in 2013


43

Figure 29 illustrates prospects for diversification of suppliers of pork imported by South Africa in 2013. 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 2013. 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.

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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.

http://www.daff.gov.za/

http://www.easydata.co.za/

http://www.macmap.org/SouthAfrica

http://www.trademap.org/

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