F.J. Kleyn, SPESFEED (Pty) Ltd, PO Box 48, Rivonia, 2128, South Africa

Introduction

In geographical terms Africa and Europe are neighbors. Logically they would make ideal trading partners in terms of poultry products. Whilst there is a fair amount trade between the countries within each continent there is very little inter-continental trade. There are a number of reasons why this is so. These would include the demographic differences between the continents, the various trade and phytosanitary regulations that exist, differences in consumer preferences as well as the differences in production systems and input costs. The purpose of this paper is to examine how these factors impact on current trade patterns and how they are likely to influence trade in poultry products in the future. For the purposes of this paper Africa is construed to include continental Africa as well as the Indian Ocean islands such as Mauritius, while Europe to includes both European Union countries as well as the former East Block countries, excluding Russia and the Ukraine.

In discussing any form of trade comparison between Africa and Europe two continents it would be essential to look at the overall demographics of the two regions. From data published by the CIA (1999), comparisons can be drawn between Europe and Africa (Table 1). The European economy is some 6.5 times the size of the African economy and both economies are growing at the much the same rate (4%). Currently the two continents have a similar number of inhabitants but it can be seen that population growth in Europe has been steady and is indeed expected to show a decline by the year 2025. The population in Africa on the other hand has trebled in the past 40 years and may double again by the year 2025. If the economies both continue to grow at the same rate, then it is clear that the average African will get poorer with each year that passes while the average European will become wealthier.

A factor that needs to be mentioned is the prevalence of HIV/Aids, particularly in Southern Africa. Stafford (1999) reports that in South Africa, where reasonable records are kept, an infection rate of 23% has been reported at antenatal clinics (4 million people). Accurate statistics are not available for countries such as Zambia, Zimbabwe or Malawi but it is known that the problem is of pandemic proportions there. Many of the South African sufferers are expected to die by the year 2005 at which stage the population growth rate will drop to 0.8%. It will probably become negative thereafter. This will directly impact on the food sector through a reduction in potential sales as well as through a loss of skilled, hard to replace workers.

From figures published by the Foreign Agricultural Service (1999) some idea of poultry meat production, consumption and trade can be gained.

(p) = preliminary (f) = forecast

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From the table it can be seen that European poultry production has increased by about 10% over the past 5 years, while African production has increased by some 60%. In Africa very little poultry meet is exported and what little there is, is mostly sold to other African countries. There has however been considerable growth in this trade although this is off a low base. European poultry exports are considerable, but there has been little growth over the past five years. Two countries, namely France and the Netherlands are responsible for 70% of the total exported product. France is also Europe’s largest poultry producer with a production of 2,273,000 tons being expected in 2000. More than 40% of French production is normally exported, but mainly to other EU countries. Exports to non EU countries are expected to decrease by 7 to 10 percent in 1999 and 2000, due to larger world supplies and increased competition, mainly Brazil (FAS, 1999).

The limited amounts of poultry product imported by South Africa is comprised principally of Turkey, both de-boned and whole (20 000 tons) and broiler hind quarters. 

Market access remains an important issue when looking at world trade in meat and meat products (Brooks, 1999). In order to access any market a number of conditions need to be complied with. These cover disease and veterinary regulations, labeling, tariffs and slaughter techniques. In the future production methods, feed ingredients (GMO and non-GMO) and chemical use (drugs and hormones) are likely to play an ever increasing role.

Developing countries, particularly in Africa have found it difficult to integrate more closely into the world economy. In addition to deep-seated differences in economic power, developing countries also face increasing protectionism by the rich industrialized countries. Despite agreements made at the World Trade Organization’s Uruguay Round of trade negotiations that set limits to agricultural subsidies, member countries of the Organization for Economic Development (OECD), 29 countries who account for two-thirds of world economic output, continue to subsidize agricultural production. Agricultural subsidies by OECD nations averaged US$ 350bn in the period 1996-1998, a figure which compares with total agricultural exports from developing countries of US$ 170 bn. (Sikhakhane, 1999).

The effect of this agricultural support, whether in the form of direct subsidies or direct payments to farmers, is to allow agricultural products to be sold on domestic and world markets at below production cost. The impact on producers in developing countries can be significant not only by precluding their entry into northern markets but also through unfair competition in their own markets (Unctad, 1999).

As mentioned much of the poultry meat imported by Africa is in the form of broiler hindquarters. The prices would indicate dumping.

The United States Trade Representative (1999) in their trade estimate for South Africa make comment that despite strenuous lobbying by the U.S. Government, the (South African) Board of trade and Tariffs raised tariffs on imported frozen chicken parts from a 27 percent flat rate to R 2.20 per kg.

Much of the international trade in poultry products is controlled by either phytosanitary or trade regulations.

South Africa, Africa’s largest poultry producer and therefore the most likely country to be an exporter of poultry products currently has endemic Newcastle Disease within its borders. The strain of the virus is particularly severe and given South Africa’s limited resources it is unlikely that there will be any short-term resolution of the problem (Buys, 2000).

Although beyond the scope of this paper, North America are extremely efficient producers of poultry products but they are largely precluded from the European market.

b.    Broiler Production:

Apart from a few large integrated producers poultry production in Africa is less sophisticated in Africa than it is in Europe, with open sided housing being the production system of choice. The recent banning of Anti-Biotic Growth Promoters (APG) in Europe has not occurred in Africa, although the South African authorities would like to follow suite (Sykes, 1999).

 

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In order to compete in global markets, each geographical region has certain assets and/or liabilities in terms of production efficiencies. These have been tabulated below.

Table x: Competitive balance sheet for poultry product exports for Africa and Europe

Most of Africa has a favorable environment for poultry production, both from a climate point of view and from a health point of view. Unfortunately, the dry climate that is so favorable for poultry production is also unfavorable for crop production. As a consequence of this many feed ingredients need to be imported from distant suppliers which makes poultry feed in Africa 10 to 20% more expensive than it is in Europe.

Much of Africa has poorly developed infrastructure, which coupled with the large distances to potential export markets makes competitive exporting difficult. In addition Africa has low levels of technical expertise, a lack of integration and generally poor economies of scale. For Africa countries the trade barriers imposed by European countries are formidable and present an obstacle that is not likely to be overcome.

The differences in disposable income coupled with other cultural, social and health factors means that African and European consumers are very different in their outlook and purchasing patterns. In the broiler market, Europeans are is tending towards products such as breast fillets and further processed poultry products, whereas in Africa the market is still largely for whole birds, both live and processed. Africans prefer legs and thighs to breast meat and are not prepared to pay a premium for breasts. In Africa there is a strong market for offal and heads and feet, which are known as walkie-talkies in the trade.

Many of the eggs produced and sold in Europe are currently produced in alternative production systems. Consumers are discerning in their choice as to which eggs they will or won’t buy. In Africa, price is still the overriding factor when it comes to product selection and this is a situation that is unlikely to change.

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Africa is likely to continue as an efficient producer of egg and egg products for as long as spent hens realize the same price as point of lay pullets. Europe on the other hand will produce more expensive eggs as they move towards alternative production systems. This is likely to create a gap in the market for African producers to export their product, although not to Europe where eggs from caged birds will be probably banned.

References