A PROFILE OF THE SOUTH AFRICAN EGG INDUSTRY MARKET VALUE CHAIN

Transcription

1 A PROFILE OF THE SOUTH AFRICAN EGG INDUSTRY MARKET VALUE CHAIN 2010 Directorate Marketing Private Bag X 15 Arcadia 0007 Tel: /6 Fax: DM@daff.gov.za 1

2 TABLE OF CONTENTS 1. DESCRIPTION OF THE INDUSTRY PRODUCTION AREAS PRODUCTION TRENDS CONSUMPTION vs PRODUCTION EMPLOYMENT IMPACT TO THE FEED SECTOR 7 2. MARKET STRUCTURE DOMESTIC MARKET AND PRICES IMPORT EXPORT ANALYSIS EXPORT OF EGGS IMPORT OF EGGS SHARE ANALYSIS OF EGGS Export share analysis of eggs THE EGG VALUE CHAIN INDUSTRY ASSOCIATIONS MERGERS AND ACQUISITIONS QUALITY EGG GRADING DIFFERENTIATING EGGS EMPOWERMENT PLANS BY THE INDUSTRY BARRIERS TO ENTRY OPPORTUNITIES MARKET INTELLIGENCE Export tariffs NON TARIFF BARRIERS (NTB s) 33 2

3 CHAPTER I: EGGS CHAPTER II: EGG PRODUCTS CHAPTER III: SPECIAL GUARANTEES Import tariffs COMPETITIVENESS OF THE EGG INDUSTRY COMPETITIVENESS OF EGG IDUSTRY EXPORTS COMPETITIVENESS OF EGG INDUSTRY IMPORTS ACKNOWLEDGEMENTS APPENDICES 64 3

4 1. DESCRIPTION OF THE INDUSTRY The egg industry used to be controlled by the Egg Board which ceased to exist in Presently South African Poultry Association (SAPA) have organized majority of egg producers under Egg Producer, Chick Producer and Developing Poultry Producers organization. The egg industry is fragmented with a few major players and a number of small and medium-sized producers. Egg production takes place throughout the country, and rearing of good quality pullets requires an extreme cold temperature; that is why Kwazulu Natal midlands seems to be pullet rearing capital of South Africa. On average the annual gross turnover over the 10 year period was R million at producer level retaining eggs as the 4 th largest animal product in agriculture in South Africa. The contribution of eggs in terms of gross value of agricultural production is illustrated in Figure 1. 7,000 6,000 Figure 1: Gross value of egg production R' ,000 4,000 3,000 2,000 1, / / / / / / / / / /09 Production Years Gross value Source: Agricultural Statistics. Figure 1 shows that the gross value of egg production in the country was increasing throughout the period under review. There is an increase of R3.7 million (249%) in 2008/09 compared to 1999/00. This was mainly due to production and price increases. However the consumption of eggs in the country is lower as compared with other developing countries and an increase in consumption will lead to higher prices and production PRODUCTION AREAS Eggs are produced throughout the country. The total South African laying flock was 23.5 million hens in In 2008 egg production reached a record of cases per week and in 2009 egg production was cases per weak which was a decrease of 4

5 4.1%. This is mainly due to the decreased production experienced in January to July One case is equivalent to 30 dozen (360 eggs), so the total production of 2009 is estimated at million eggs per week. This figure is based on 96% survival rate, 0.13% mortality rate per week during the laying cycle. The laying cycle was extended by two weeks which will now starts at 18 weeks of age to 71 weeks of age. Eggs are produced at a feed conversion ratio of 2.2 kg per kg of egg. The contribution of various provinces to the total South African egg production is represented in Figure 2. Figure 2: Provincial egg production Eastern Cape 4.3% Limpopo 7.0% Free State 13.9% Mpumalanga 5.6% Northern Cape 0.3% Gauteng 31.7% Kwazulu-Natal 15.1% North West 7.3% Western Cape 14.9% Source: SAPA. Gauteng is the largest producer of eggs in South Africa with the market share of 31.7% followed by KwaZulu Natal and Western Cape provinces with shares of 15.1% and 14.9% respectively. These three provinces account for more than 61% of the production while remaining 6 provinces have a combined market share of 39%. This is because production follows consumption areas as eggs are perishable and cannot be transported for long distances PRODUCTION TRENDS The egg production figures usually include hatching eggs with table eggs. Non-commercial or backyard flocks are not included. Commercial egg production is dominated by three producers, Eggbert, Nulaid and Highveld Cooperative. These three commands around 51% of the market share while the remaining 49% is produced by the Small, Medium and Micro enterprises (SMME s) and developing sector. The average number of laying flock for 2008/09 was hes which has decreased by hens (-3.7%) compared to 2007/08 flock. This is mainly due to a decrease of day-old pullets placed in the year 2009 by 0.08%. Production of eggs and laying hens over the past decade is illustrated in Figure 3. 5

6 1000 ton Figure 3: Egg production and number of hens 25,000 20,000 15,000 10,000 5, hens 1999/ / / / / / / / / /09 Production Years Production Hens Source: Agricultural Statistics and SAPA. The production of eggs and number of laying hens followed the same trends between the periods of 1999/99 to 2007/08 and during 2008/2009 number of laying hens decreased by 3.7% compared to 2007/08 while the production continued increasing CONSUMPTION vs PRODUCTION The two key factors impacting on the demand for eggs are population and real income growth. Other factors such as changing life styles, egg production systems and health scares have a role to play in influencing demand but they are mainly evident in developed countries. In the developing countries, people are much less concerned about whether layers are kept in cages or not, or that eating eggs can have a negative impact on the blood cholesterol levels of a small proportion of the population but other taboos exist that impact negatively on egg consumption. Figure 4 depicts local consumption of eggs comparing it to the local production for each year to determine if the country is self sufficient in terms of eggs or not. 6

7 500 Figure 4: Consumption vs Production of eggs ton / / / / / / / / / /09 Period (Years) Production Consumption Source: Agricultural Statistics. Figure 4 above indicates that the total production of eggs was more than the total egg consumption throughout the period under review, and both showed an increasing trend. In 2008/09 consumption and production of eggs increased by 50% and 49% respectively as compared to 1999/00. South Africa s egg production is sufficient for the local consumption and has the capacity to export. The demand factors are influenced by many reasons such as improving standards of living amongst the consumers, which push a large number of consumers towards protein filled diets. Other reasons include increased marketing by egg producers, price competitiveness relative to other proteins on the market and a still-low per capita consumption of eggs compared with other economies in the world EMPLOYMENT The number of egg producers are estimated at about (of which 267 are commercial and 1554 constitutes of emerging farmers) and they own nearly laying hens and employed about farm workers of which around workers are in the egg industry and around workers are employed in the chick industry IMPACT TO THE FEED SECTOR Egg industry is one of the main customers of the Animal Feed Manufacturers Association (AFMA). Both egg and broiler industries commanded around 68% of AFMA production and 20% of maize production. Egg industry consumes around tons of feed annually. Employment in the feed industries is estimated at workers. 7

8 2. MARKET STRUCTURE 2.1. DOMESTIC MARKET AND PRICES The domestic market consists of 5 main retailers (Pick n Pay, Shoprite-Checkers, Spar, Woolworths and MassMart) and SMME s in the retail sector. These retailers buy the largest share of domestic production. In terms of production, commercial egg industry is stable by nature, meaning that, although demand may decrease or increase, supply remains relatively stable as a result of the lengthy production cycle. A small excess supply lead to a rapid price decrease and a small supply shortfall will be reflected in a rapid price increase. In order to manage this imbalance between supply and demand, producers determine the price of their commercial eggs weekly, on a Monday, by taking into account the number of eggs sold in retail stores during the previous week. The producer price of eggs over the past decade is illustrated in Figure 5. Figure 5: Price of eggs per dozen Rand per dozen / / / / / /05 Production Years 2005/ / / /09 Source: Agricultural Statistics. The price of eggs increased continuously throughout the production years and in 2008/09 the price was R8.83 per dozen. This is an increase of R1.33 compared to 2007/08 and an increase of R5.26 (60%) compared to 1999/00. This increase might have caused by the high feed prices, although there was a decrease of 3% of feed cost in 2009 the feed prices are still high following the increase of 32% experienced in

9 2.2. IMPORT EXPORT ANALYSIS Imports in South Africa are largely exchange rate driven while exports are mainly affected by sanitary rules that countries like EU and USA apply. Figure 6 compares volumes of imports and exports of eggs from 2000 to ,000,000 Figure 6: Eggs import and export quantities 10,000,000 Quantity (Kg) 8,000,000 6,000,000 4,000,000 2,000, Period (Years) Exports quantity Imports Quantity Source: Quantec Easy data. Figure 6 shows that export volume far exceeded import volume from 2000 to From the year 2005 to 2007 the situation changed when imports exceeded exports but they were effectively below 1000 tons. However during the year 2008, export volumes became higher than import volumes again but with a very low margin of 1,183,766 kg and in 2009 egg exports increased to 4,061,682 kg. Generally, there is no need for South Africa to import eggs because the local production is sufficient for the local demand EXPORT OF EGGS Eggs are exported in a shell and as yolks (liquid and dried). Figure 7 show the export destinations of eggs during the period under analysis. 9

10 Figure 7: Destinations of egg exports in 2009 Angola 7% Democratic Republic of the Congo 1% Cameroon 1% Italy 1% Not allocated 11% Kenya 1% Mozambique 24% Zimbabwe 48% Nigeria 4% Uganda 1% United Republic of Tanzania 1% Source: Quantec Easy data. Zimbabwe (48%) and Mozambique (24%) are the main importers of South African eggs during They both commanded 72% of South African export market share of eggs and other 8 countries share 17% of South Africa s egg export market and 11% of is unallocated. South Africa exported around 36.3 million kg of eggs valued at R362.1m during the past decade. Figure 8 show exports from 2000 to Figure 8: Eggs exports Quantity (Kg) 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, Period (Years) 100,000,000 90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 Value (Rands) Exports quantity Exports Value Source: Quantec Easy data. 10

11 Figure 6 indicates that exports (quantity &Value) reached the peak in 2002 and decreased drastically from 2003 to 2008 and increased a bit in Both exports quantity and value has been following the same trend throughout the period under review but from 2007 to 2009 exports value has been higher than the quantity. This might be the impact the weaker South African rand compared to US dollars. 6,000,000 Figure 9: Egg exports to SADC 5,000,000 Quantity (Kg) 4,000,000 3,000,000 2,000,000 1,000, Period (Years) Angola Malawi United Republic of Tanzania Zimbabwe Source: Quantec Easy data. Democratic Republic of the Congo Mozambique Zambia It is clearly indicated from figure 9 above that within SADC majority of South African egg exports are going to Angola, Mozambique and United Republic of Tanzania. Angola commanded the highest market shares of eggs from 2001 to 2004; Mozambique received the greatest shares during 2000, 2005 and 2008 while United Republic of Tanzania was the highest during 2009 only. 11

12 Figure 10: Egg exports to European Union 350, , ,000 Quantity (Kg) 200, , ,000 50, Period (Years) Germany France United Kingdom Italy Source: Quantec Easy data. In the European Union Germany was the main importer of South African eggs from 200 to 2005 followed by Italy from 2006 to The second highest level of importers from European Union was United Kingdom. Generally, Germany has been the net importer of South African eggs throughout the period under review. The value of egg exports from regions are represented from Figure 11 to Figure

13 60,000,000 Figure 11: Value of egg exports from provinces 50,000,000 value (Rands) 40,000,000 30,000,000 20,000,000 10,000,000 0 Period (Years) Eastern Cape 3,062,530 5,390,661 5,799, , , Free State 158, , , ,821,321 13,402,46 Gauteng 14,325,82 24,205,13 55,278,38 23,806,00 6,254,594 1,789, ,849 2,905,896 12,403,81 26,783,16 Kwazulu-Natal 4,622,713 6,347,715 23,340,51 15,918,29 11,624,69 5,283,282 2,457,838 4,151, ,044 97,025 Limpopo , ,942 12,700,86 Mpumalanga 62, , ,552 5, ,436 North West 2,366, ,664 1,019, , , ,508 Western Cape 3,730,375 7,693,356 6,785,466 10,977,78 7,787,626 1,686,420 2,312,780 3,589,251 10,021,65 13,993,72 Source: Quantec Easy data. Figure 11 illustrates that Western Cape, KwaZulu Natal and Gauteng provinces played a major role in the export of eggs. This may be due to the fact that these provinces are exit points and they are also main production centers. The highest export value was experienced in 2002 and 2009 by Gauteng province. The year 2002 recorded high export values from provinces but it was followed by continuous declines until they show slight increases in 2008 to Value (Rands) 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Period (Years) Figure 12: Value of egg exports from Western Cape Province City of Cape Town 3,718,855 7,572,206 6,321,964 8,869,976 6,537, ,998 2,094,821 2,959,389 9,821,817 13,758,866 Cape Winelands 0 34, , , Overberg 0 86, , Eden 11, ,798 1,974,868 1,248, , , , , ,858 Source: Quantec Easy data. Exports of eggs originating from the Western Cape are mainly from the City of Cape Town and to a lesser extent Eden. City of Cape Town recorded the highest values throughout the period under 13

14 review except only in 2005 where Eden recorded the highest. This is because City of Cape Town is the main exit point within the province. Intermittent exports were recorded from Cape Winelands but diminished from 2004 to 2009 and Overberg which diminished from 2006 through to ,000,000 Figure 13: Value of egg exports from Eastern Cape Province 6,000,000 Value (Rands) 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Period (Years) Cacadu 0 1, , Amatole 41, , Nelson Mandela 3,062,530 5,969,370 5,627, ,062 12, Source: Quantec Easy data. In the Eastern Cape Province, exports of eggs were mainly from the Nelson Mandela municipality between the periods of 2000 to It reached its peak in 2001 and declined from 2002 to 2004 and therefore diminished from 2005 through to Irregular exports were recorded from Cacadu and Amatole municipalities. There were no records of egg exports value from 2006 to 2009 in the Eastern Cape Province.. 16,000,000 Figure 14: Value of egg exports from Free State Province 14,000,000 12,000,000 Value (Rands) 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Period (Years) Motheo 158, , , ,821,321 13,402,469. Source: Quantec Easy data. Exports from the Free State Province were originating mainly from Motheo district. However between the years 2000 and 2002, the value of egg exports was below R 1 million and diminished from 2003 to In 2008 export resumed at a very high value just below R 3 million and reached a peak of R13 million in

15 12,000,000 Figure 15: Value of egg exports from Kwa-Zulu Natal Province 10,000,000 Value (Rands) 8,000,000 6,000,000 4,000,000 2,000,000 0 Period (Years) Umgungundlovu 2,360,023 2,788,539 5,487,566 6,491,542 4,868,797 2,539, ,099 Uthukela 1,603,011 2,816,740 7,070,821 1,996, Umkhanyakude , Uthungulu 0 16,016 20, ,530 4, ilembe 659, ,799 10,646,88 7,191,822 6,001, ethekwini , , , ,039 2,739,286 2,457,838 4,151, ,044 95,926 Source: Quantec Easy data. Exports of eggs from the Kwazulu Natal were mainly originating from ethekwini, Uthukela, Ilembe and UMgungundlovu. The highest export value of R10.1 million was recorded in 2002 by Ilembe municipality. Export values generally dwindled from 2003 and diminished from 2006 with the exception of exports from ethekwini which displayed records throughout the period under analysis. 2,500,000 Figure 16: Value of egg exports from North West Province 2,000,000 Value (Rands) 1,500,000 1,000, ,000 0 Period (Years) Bojanala 2,366,89 664,664 1,019,49 460, , ,200 Southern ,308 Source: Quantec Easy data. 15

16 Figure 16 indicates that in North West Province, Bojanala district exported eggs from 2000 to 2004 and they diminished from 2005 into 2008 before resuming again in Southern district started to display record of egg exports values in Value (Rands) 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 Period (Years) Figure 17: Value of egg exports from Gauteng Province Sedibeng 0 102, , ,379,967 2,275,138 1,150,925 Metsweding 0 0 3,231,336 3,056, West Rand 3,066 55, ,435 6, ,177 Ekurhuleni 2,276,390 1,702,211 3,779,506 5,722, ,666 1,243, ,678 47,213 17,942 2,597,450 City of Johannesburg 6,598,264 22,039,704 46,843,75814,627,671 3,178, , , ,080 9,865,038 22,543,535 City of Tshwane 5,448, ,386 1,074, ,820 2,276, ,221 2,281 12, , ,074 Source: Quantec Easy data. Exports from Gauteng Province were originating mainly from Ekurhuleni, City of Tshwane and City of Johannesburg as illustrated in Figure 17 above. Coty of Johannesburg recorded the highest egg exports values from 2000 to 2004 and again in 2008 to Intermittent values were recorded from Sedibeng, Metsweding and West Rand district municipalities. 250,000 Figure 18: Value of egg exports from Mpumalanga Province 200,000 Value (Rands) 150, ,000 50,000 0 Period (Years) Nkangala 62, , ,436 Ehlanzeni 0 230, , Source: Quantec Easy data. 16

17 Figure 18 show that Mpumalanga Province recorded irregular exports throughout the period under review from Nkangala and Ehlanzeni municipalities. The highest exports value of R was recorded from Ehlanzeni municipality in 2001 and Nkangala municipality recorded the highest value of R in ,000,000 Figure 19 : Value of egg exports from Limpopo Province 10,000,000 Value (Rands) 8,000,000 6,000,000 4,000,000 2,000,000 0 Period (Years) Mopani , Vhembe ,688 10,598,707 Capricorn ,254 1,907,375 Waterberg ,781 Source: Quantec Easy data. Figure 19 shows that Limpopo province made irregular exports from 2003 to 2009 in four districts (Mopani, Vhembe, Capricorn and Waterberg). There was a sharp increase from Vhembe district municipality in Generally, there were improved records from Limpopo Province in IMPORTS OF EGGS Eggs are imported in a shell and as yolks (liquid or dried). Figure 18 below shows the import of eggs from 2000 to

18 Figure 20: Egg imports Quantity (Kg) 1,000, , , , , , , , , , Period (Years) 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Value (Rands) Import Quantity Import Value Source: Quantec Easy data. Figure 20 shows that egg imports (quantity & value) by South Africa moved in an increasing trend from 2001 to 2005 before a continuous decrease from 2006 to It was generally less expensive for South Africa to import eggs throughout the period under analysis except in 2006 only. Quantity (Kg) 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Figure 21: Egg imports from European Union Period (Years) Germany Denmark Netherlands Source: Quantec Easy data. 18

19 It is clearly indicated from figure 21 that the highest egg imports in the European Union countries to South Africa were from Denmark during 2006 to During the same period there were some intermittent supply of eggs from Germany and Netherlands. 18,000 Figure 22: Egg imports from Asia 16,000 14,000 Quantity (Kg) 12,000 10,000 8,000 6,000 4,000 2, Period (Years) China Hong Kong Taiwan Source: Quantec Easy data. Figure 21 displays fluctuations of egg imports from Asian Countries with the highest egg imports from Taiwan in 2000, Hong Kong in 2001 and China in 2002 and Figure 23 below shows countries of origin for eggs imported by South Africa during the period from 2000 to Figure 23: Origins of egg imports in 2009 France 25% Hong Kong 1% Denmark 74% Source: Quantec Easy data. 19

20 The main supplier of eggs to South Africa during 2009 is Denmark accounting for 74% and the 25% is from France and Hong Kong supplied 1%. It is only the highest values which were considered during this analysis. Other countries like Taiwan and Germany also had a share of South African market share of less than one percent. 3. SHARE ANALYSIS 3.1. Export share analysis of eggs Table 1: Export share analysis of eggs from Provinces Years Province Eastern Cape Free State Gauteng Kwazulu-Natal Limpopo Mpumalanga North West Western Cape Total Source: Quantec Easy data. Table 1 indicates that Gauteng province commands the greatest share of egg exports followed by Kwazulu Natal and Western Cape Provinces. This is because they are the main production centers and have exit points. However fractional exports of eggs occurred from the Eastern Cape, Free State, North West, Mpumalanga and Limpopo Provinces. Table 2: Export share analysis of eggs from Western Cape Province Years Districts City of Cape Town Cape Winelands Overberg Eden Total Source: Quantec Easy data. The City of Cape Town commands the greatest shares of eggs exports from Western Cape Province. This is because it is the main exit point in the Western Cape Province. Irregular exports occurred from the Cape Winelands, Overberg and Eden district municipalities. Table 3: Export share analysis of eggs from Eastern Cape Province 20

21 Years Districts Cacadu Amatole Nelson Mandela Total Source: Quantec Easy data. In the Eastern Cape Province, Chris Hani district commanded the greatest share of eggs exports until 2004 while Cacadu commanded the greatest shares only in Amatole district recorded fractional exports in the years 2000 and However from the year 2006 export shares diminished in Eastern Cape until the year Table 4: Export share analysis of eggs from Free State Province Years Districts Motheo Total Source: Quantec Easy data. In the Free State Province, exports of eggs occurred from the Motheo district municipality during the period 2000 to 2002, and diminished from 2003 to 2007 and resumed in Table 5: Export share analysis of eggs from Kwazulu Natal Province Years Districts Umgungundlovu Uthukela Umkhanyakude Uthungulu ilembe ethekwini Total Source: Quantec Easy data. In the Kwazulu Natal Province, egg exports share are dominated by UMgungundlovu, UThukela, Ilembe, and ethekwini and after 2004 the situation changed when contended for the greater shares during the period 2005 to Table 6: Export share analysis of eggs from North West Province Years Districts Bojanala Southern Total Source: Quantec Easy data. 21

22 Bojanala district municipality commanded 100% share of all egg exports originating from the North West Province from 2000 to 2004 and diminished from 2005 into 2008, before resuming in 2009 with the share of 31%. Southern district municipality displayed a share of 39% in 2009 only. Table 7: Export share analysis of eggs from Gauteng Province Years District Sedibeng Metsweding West Rand Ekurhuleni City of Johannesburg City of Tshwane Total Source: Quantec Easy data. In the Gauteng Province, City of Johannesburg, City of Tshwane and Ekurhuleni commanded the greatest shares of exports of eggs during the period under review. However, Irregular exports occurred from Sedibeng, Metsweding and West Rand districts. Table 8: Export share analysis of eggs from Mpumalanga Province Years Districts Nkangala Ehlanzeni Total Source: Quantec Easy data. In Mpumalanga Province, fractional exports occurred from Nkangala and Ehlanzeni district municipalities which diminished during the period 2007 to Table 9: Export share analysis of eggs from Limpopo Province Years Districts Mopani Vhembe Capricorn Waterberg Total Source: Quantec Easy data. In Limpopo Province, irregular exports of eggs were recorded from the four districts, (Mopani, Vhembe, Capricorn and Waterberg). Vhembe district municipality commanded the highest share of 83% in

23 4. THE EGG VALUE CHAIN Figure 24: Structure of the poultry egg industry value chain for million Consumers (Estimate for 2009) Consumption ton Per Capita Consumption = 8.17 kg / year (130 eggs) Informal traders 23.6 million spent hens Shoprite/Checkers. Pick n Pay Spar Woolworths Massmart Boxer SMME s Informal traders Retailers Packers and Processors Export Import Import: 0.1% of Consumption or 495 ton. Export: 0.27% of production or ton Commercial Production: Eggbert (7% ) Nulaid. (32%) Highveld (12%) Supply 51% or 9.45 million cases per year Hatcheries Domestic Production ton or 18.5 million cases per year or 4.52 % of Agricultural Production Avichick Nulaid Boskop Rossouw Hyline SMMEs: 49% or 9 million cases sold per year. Employment workers Breeders Feed companies Employment 2500 workers Farms 267 commercial and 1554 emerging producers Employment workers 2 Breeders: Hyline and Lohnmann Feed companies: Meadow Epol 75% of industry Afgri Independent millers: 25% of industry - SAPA Stats (Commercial only) 3 producers handle 51% of total egg supply to RSA Source: Adapted from NAMC and SAPA. 23

24 The value chain depicted in Figure 24 consists of 5 stages: grandparents, parent stock, laying flock and commercial egg production and the market. The various operations are linked by a series of arrows. a. Egg production starts with the import of genetic stock (known as grandparents) into South Africa as day old chicks. In South Africa there are two genetic breeds of chickens that lay eggs for the commercial market, Lohmann and Hyline. Both breeds are imported. The Lohmann breed emanates from Europe and is imported by Lohmann SA, a joint venture between Pioneer Foods and Golden Lay Farms. Lohmann SA imports the Lohmann genetic stock (known as Lohmann Brown and Silver grandparents) into South Africa as day old chicks. The grandparents are reared to lay eggs, which are incubated to produce day old chicks called parents. It then sells its production of parent stock to its joint venture owners, Pioneer Foods through its Nulaid division, and Golden Lay through Avichick. The company also produces day-old parents to all African states south of the equator. Hyline is an American breed and is imported, solely, by Hyline SA. Hyline SA only imports grandparents, rears them to breed parent stock which in turn produce hatching eggs for day old commercial layers. It sells all its day-old pullets to independent rearing farms and is not involved in rearing point of lay hens. b. During the second stage, the parents are reared to maturity and produce fertile hatching eggs. The eggs produced by these parents are incubated and the day old chicks that hatch are called pullets. c. During the third stage, the pullets are then reared on rearing farms until they are mature at 21 weeks and are ready to lay commercial eggs, at which stage they are called Point of Lay hens. Some egg producers in South Africa rear their own Point of Lay hens as it is a very crucial phase in the life of the hen and the quality of the rearing process has direct bearing on the efficiency with which the hen will eventually produce eggs during her laying phase. d. The fourth stage involves production of final product, eggs. This stage is dominated by 3 companies (Nulaid, Eggbert and Highveld Co-op) Eggs are produced in various sizes and they are graded. Commercial layers have a production lifespan of approximately one year after which they are culled and sold as spent hens mainly in the rural areas where the demand is high through informal traders. e. The fifth stage is the market. Output of the industry is basically eggs and spent hens. There are 6 main retailers, SMME s and informal traders in South Africa that buys eggs from these farms and sell to approximately 48 million consumers countrywide. Informal traders play a big role in distributing spent hens to consumers. The distribution chain in the egg industry tends to be short with approximately 75% of the total production being delivered to the formal trade sector. The greater the distance between producer and consumer, the more complex is the marketing channel. The whole production process, from grandparent stage to the culling of the hen, runs close to three years. In addition to these production processes there are packing and value addition 24

25 (liquid egg) functions that are important in the egg value chain. Large companies have integrated or formed subsidiaries to perform these functions while small farms are still struggling and they even sell their eggs as cracked and ungraded. 5. INDUSTRY ASSOCIATIONS The South African Poultry Association (SAPA) SAPA is a fully-fledged commercial representative body whose mission is to advance all matters tending towards the improvement of the poultry and allied industries in South Africa by embracing and co-coordinating the objects of subsidiary organisations. Developing Poultry Farmers Organisation (DPFO) A division of SAPA, was established in 2003 to cater for the specific needs and requirements of emerging and small-scale poultry producers. Egg Organisation This organization s main mission is improving the egg industry and promoting it on a national level. Chick Producers Organisation This organisation gives specialized attention to matters concerning their members to enable them to supply quality breeding stock for South Africa. 6. MERGERS AND ACQUISITIONS In 2004, Nulaid acquired Golden Lay s commercial egg production facilities thereby increasing the market share to 32%. Golden Lay exit the commercial egg market but retain its day-old pullet business, as well as its Point of Lay hen rearing facility in KwaZulu-Natal, to become a specialized rearing firm producing pullets and Point of Lay hens. 7. QUALITY The quality of the eggs and their stability during storage is largely dependent by their physical structure and chemical composition. Maintaining fresh egg quality from the producer to the consumer is one of the major problems facing those engaged in the marketing of eggs. Proper attention to production, distribution and point of sale phases are of vital importance in maintaining egg quality. 25

26 8. EGG GRADING Agriculture and Agri-Food regulations define three quality grades that apply to eggs for sale to customers. These are: Grade A - sold at retail markets for household use Grade B - used mostly in bakeries Grade C - sent to egg breakers for processing Only Grade A eggs are sized according to the weight of each egg. Jumbo - at least 70 g Extra Large - at least 63 g Large - at least 56 g Medium - at least 49 g Small - at least 42 g Pee Wee - less than 42 g 9. DIFFERENTIATING EGGS Eggs are differentiated according to the production systems as follows: Organic Free Range These eggs are produced by free-range hens that are fed on grains and pulses that are grown without pesticides, chemical fertilisers or any other genetically engineered products. Omega 3-enriched Omega 3 fats, which are excellent for brain functioning, the immune and nervous systems and healthy hearts, are found in oily fish. The hens that lay these eggs are fed salmon oil as part of their diet. Omega 3-enriched eggs are not necessarily free range. Free range The chickens that lay these eggs are exposed to sunlight and grass pastures. They have room to scratch, flap and bath in the dust. Their diet is not necessarily vegetarian, it could include insects or fishmeal. 26

27 Barn These eggs are produced by chickens that live inside, but are not kept in cages. Barn eggs are laid by chickens that are fed a vegetarian diet of grains and pulses. Grain fed Grain-fed chickens don't eat commercial feed, which can include fish and chicken meal. These eggs are not free range, and not necessarily barn. The chickens may be kept in cages. Commercial These are the cheapest eggs to buy, and so make up the bulk of the eggs consumed in the country. The chickens are kept inside, in cages. They are fed with meal, which includes commercially farmed grains and pulses and processed fish and/or chicken meal. Electric lights are kept on much of the time to encourage the chickens to lay. 10. EMPOWERMENT PLANS BY THE INDUSTRY The Agricultural Development Corporation in the Limpopo province assisted emerging farmers to grow eggs for the Mashashane hatchery on a contract basis. Workers of Nulaid bought shares in the Nulaid egg-producing farm near Kaalfontein. Ukhahlamba Poultry Farm (Pty) Ltd trading as Nulaid Eggs KZN is a black farmer who is a contract grower for Nulaid. The eggs produced are sold to Nulaid customers in the KwaZulu-Natal areas. The Developing Poultry Farmers Organization (DPFO) and the South African Poultry Association (SAPA) jointly work on strategies to empower the emerging poultry farmers. Heidel Eggs in White River a town in the Mpumalanga province, is a 100% black-owned enterprise under the Nkosana 145 Trust. It was in 2001 when the then managers and workers of Heidel Eggs started negotiating the possible purchase of the farm from the then owner, Jan Wilkens. The number of beneficiaries in the trust initially amounted to 241 and the trustees were made up of persons elected by the employees of Heidel Eggs. The new directors are also the trustees of the trust. The new broad based black economic empowerment project is under the general management of Mark Gouws. The funds for the purchase price were raised through a combination of Department of Land Affairs (DLA s) Land Redistribution for Agricultural Development (LRAD) grant and a loan from Land Bank that was later taken over by Standard Bank. It also has operations in Mozambique and Swaziland. (Makou, undated) 27

28 In 2005 Afgri financed one of the biggest BEE transactions in the egg industry by buying the second biggest egg distributor, Eggbert eggs farm near Boksburg for R 22 million for staff and management. El-Azaar poultry farm in Kroonstad (Free State) mentors two projects in Brandfort namely: a. Brandfort Poultry in the Free State province received R in 2008 from Masilonyana Municipality through its Local Economic Development Programme. These funds were enough to construct the necessary infrastructure. Started off with layers. b. Waya Waya Poultry in Brandfort, Free State province; was allocated a grant to the amount of R from the Provincial Department of agriculture in Free State (PDA: FS CPS-SP funding programme) in collaboration with the European Union. They furthermore received an amount of R from the Department's CASP funding programme. Started off with layers. Their marketing agreement is that the buyer (El-Azaar poultry farm) will buy all the eggs produced at a predetermined price for 5 years (until 2013). The projects have the option to renew the contract after four years. The buyer supplies all packaging material and feed. 11. BARRIERS TO ENTRY New entrants are free to enter, the only limitation being the availability of laying flock, capital and expertise. Grading, packaging, transportation and bar coding of the eggs hinders formal market access of emerging egg producers to the commercial sector. Accessing finance or working capital to procure stock and cover overhead costs is a barrier. The major supermarket chains require formalized distribution channels with the ability to supply regionally and nationally. Majority of the emerging farmers sell their eggs to hawkers and directly to the consumers. Direct marketing includes the following methods of selling: Sales from farm gate (farm gate) Door-to-door sales Sales to local retail shops 28

29 12. OPPORTUNITIES The huge demand for live-birds in South Africa is a lucrative business. Majority of egg producers sell their spent hens. This adds to the income generated by egg producers/farmers. Currently the rooster chicks are useless in the commercial egg industry. An opportunity exists to raise these chicks and sell them as live chickens together with spent hens. This will alleviate the current shortage of chicks in the broiler business. 13. MARKET INTELLIGENCE This chapter concerns tariffs and non tariff barriers Export tariffs Tariffs protect the domestic industries by increasing the price of imported eggs compared to domestic eggs, thereby giving domestic producers a relative price advantage. Tariffs that different importing countries apply to eggs originating from South Africa are shown in Table 10 and 11. Table 10: Export tariffs of shelled eggs 2009 No Country Angola Democratic Republic of Congo (DRC) Germany Product Description (HS:040700) Bird s eggs, in a shell, fresh, preserved or cooked: Fertilized Bird s eggs, in a shell, fresh, preserved or cooked: Excl Poultry Bird s eggs, in a shell, fresh, Preserved or cooked: Fertilized Bird s eggs, in a shell, fresh, Preserved or cooked: Other Poultry eggs for hatching Trade Regime Description Total Ad Tariffs Valorem Equivalent Tariff 15.00% 15.00% 2.00% 2.00% 5.00% 5.00% 20.00% 20.00% 0.05$/Units 35.62% 29

30 No Country Italy Kenya Mauritius Mozambique 8 Nigeria United Republic of 9 Tanzania Source: MacMap. Product Description (HS:040700) Poultry eggs, in shell, fresh, preserved or cooked Poultry eggs for hatching Poultry eggs, in shell, fresh, preserved or cooked Bird s eggs, in a shell, fresh, preserved or cooked Bird s eggs, in a shell, fresh, preserved or cooked: Fresh eggs Bird s eggs, in a shell, fresh, preserved or cooked: Other Bird s eggs, in a shell, fresh, preserved or cooked: Fresh eggs Birds eggs, in shell, fresh, preserved or cooked Birds eggs, in shell, fresh, preserved or cooked Birds eggs, in shell, fresh, preserved or cooked Trade Regime Description Preferential tariff for SA Preferential tariff for SA Preferential tariff for SA Preferential tariff for SA 2009 Total Ad Tariffs Valorem Equivalent Tariff 0.01$/Units 6.00% $/Ton 8.80% 66.40$/Ton 1.48% 0.05$/Units 35.62% 0.01$/Units 6.00% $/Ton 8.80% 66.40$/Ton 1.48% 25.00% 25.00% 0.00% 0.00% 0.00% 0.00% Preferential tariff for SA Preferential tariff for SA 2.50% 2.50% 0.00% 0.00% 20.00% 20.00% 15.00% 15.00% 20.00% 20.00% 25.00% 25.00% Table 10 shows that South African exports of shelled eggs received a preferential tariff from Germany of 66.40$/unit in 2009 and the total Ad Valorem of 1.48%. This is far too low compared to of $/unit because of the trade agreement South Africa has with the European Union countries. 30

31 Mozambique also has a preferential applied tariff of 15% for South Africa on preserved or cooked eggs while there is 0.00% tariff on fresh eggs. Kenya, Nigeria, DRC and United Republic of Tanzania s markets are highly protected with an applied tariff of 20.00% to 25.00%. Table 11: Export tariffs of dried eggs No. Country Product Description (HS:040800) Angola Congo Democratic Republic of Congo Ghana Kenya Mauritius Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened Birds egg, not in shell, and egg yolks, fresh, dried, cooked by steaming or boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter: Egg yolks: Dried & Other Birds egg, not in shell, and egg yolks, fresh, dried, cooked by steaming or boiling in water, moulded, frozen or otherwise preserved, whether or not Trade Regime Description MFN duties Tariffs 2009 Total Ad Valorem Equivale nt Tariff 15.00% 15.00% 15.00% 15.00% 30.00% 30.00% 30.00% 30.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 25.00% 25.00% 25.00% 25.00% 0.00% 0.00% 0.00% 0.00% 31

32 No. Country Product Description (HS:040800) containing added sugar or other sweetening matter: Other: Dried & other Trade Regime Description Tariffs 2009 Total Ad Valorem Equivale nt Tariff Mozambique Nigeria United Arab Emirates Zimbabwe 10 Source: MacMap. Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened Birds egg, not in shell, and egg yolks, fresh, dried, cooked by steaming or boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter: Egg yolks: Dried & Other Birds egg, not in shell, and egg yolks, fresh, dried, cooked by steaming or boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter: Other: Dried & Other Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened Preferential tariff for SA Preferential tariff for SA 20.00% 20.00% 0.00% 0.00% 20.00% 20.00% 0.00% 0.00% 20.00% 20.00% 20.00% 20.00% 5.00% 5.00% 5.00% 5.00% 40.00% 40.00% 40.00% 40.00% Table 11 shows that South Africa received a preferential tariff and MFN tariff of 0.00% for dried eggs during 2009 from Mozambique and Mauritius respectively. Zimbabwe, Kenya, Nigeria, 32

33 DRC, Ghana and Congo s markets are highly protected with an applied tariff of 20.00% to 40.00%, the main reason might be the source of revenue NON TARIFF BARRIERS (NTB s) Non-tariff barriers (NTB) take the form of strict sanitary and phytosanitary measures or adherence to stringent, certification measures such as 1SO 9000 certification. These measures span a product s lifecycle: the raw material a product is made from, the manner the product is fabricated, the management of production process, labeling standards and packaging requirements. Developed countries argue that NTBs are applied to eggs to ensure that imported products satisfy environmental, consumer health, consumer safety and social concerns. The following discussion about NTBs deals with the EU s standards. The reason for this approach is that the EU is the largest importer of eggs and it is considered to apply stringent NTB s to imported eggs. Therefore by implication if an exporter can satisfy the EU s regulation; his/her product is of the mandated standard to potentially satisfy other countries NTBs. NTBs on eggs and egg products with special guarantees are listed under Section X of Regulation (EC) No 853/2004 from chapter I to III CHAPTER I: EGGS At the producer s premises, and until sale to the consumer, eggs must be kept clean, dry, free of extraneous odour, effectively protected from shocks and out of direct sunshine. Eggs must be stored and transported at a temperature, preferably constant, that is best suited to assure optimal conservation of their hygiene properties. Eggs must be delivered to the consumer within a maximum time limit of 21 days of laying CHAPTER II: EGG PRODUCTS A. REQUIREMENTS FOR ESTABLISHMENTS Food business operators must ensure that establishments for the manufacture of egg products are constructed, laid out and equipped so as to ensure separation of the following operations: Washing, drying and disinfecting dirty eggs were carried out; Breaking eggs, collecting their contents and removing parts of shells and membranes; and Operations other than those referred to in the above two points. 33

34 B. RAW MATERIALS FOR THE MANUFACTURE OF EGG PRODUCTS Food business operators must ensure that raw materials used to manufacture egg products comply with the following requirements: The shells of eggs used in the manufacture of egg products must be fully developed and contain no breaks. However, cracked eggs may be used for the manufacture of egg products if the establishment of production or a packing centre delivers them directly to a processing establishment, where they must be broken as soon as possible. Liquid egg obtained in an establishment approved for that purpose may be used as raw material. Liquid egg must be obtained in accordance with the requirements of points 1, 2, 3, 4 and 7 of Part III below. C. SPECIAL HYGIENE REQUIREMENTS FOR THE MANUFACTURE OF EGG PRODUCTS Food business operators must ensure that all operations are carried out in such a way as to avoid any contamination during production, handling and storage of egg products, in particular by ensuring compliance with the following requirements: Eggs must not be broken unless they are clean and dry. Eggs must be broken in a manner that minimizes contamination, in particular by ensuring adequate separation from other operations. Cracked eggs must be processed as soon as possible. Eggs other than those of hens, turkeys or guinea fowl must be handled and processed separately. All equipment must be cleaned and disinfected before processing of hens, turkeys and guinea fowls eggs is resumed. Egg contents may not be obtained by the centrifuging or crushing of eggs, nor may centrifuge be used to obtain the remains of egg whites from empty shells for human consumption. After breaking, each particle of the egg product must undergo processing as quickly as possible to eliminate microbiological hazards or to reduce them to an acceptable level. A batch that has been insufficiently processed may immediately undergo processing again in the same establishment, if this processing renders it fit for human consumption. When a batch is found to be unfit for human consumption, it must be denatured so as to ensure that it is not used for human consumption. Processing is not required for egg white intended for the manufacture of dried or crystallized albumin destined subsequently to undergo heat treatment. 34

35 If processing is not carried out immediately after breaking, liquid egg must be stored either frozen or at a temperature of not more than 4 C. The storage period before processing at 4 C must not exceed 48 hours. However, these requirements do not apply to products to be de-sugared, if de-sugaring process is performed as soon as possible. Products that have not been stabilized so as to be kept at room temperature must be cooled to not more than 4 C. Products for freezing must be frozen immediately after processing. D. ANALYTICAL SPECIFICATIONS The concentration of 3-OH-butyric acid must not exceed 10 mg/kg in the dry matter of the unmodified egg product. The lactic acid content of raw material used to manufacture egg products must not exceed 1g/kg of dry matter. However, for fermented products, this value must be the one recorded before the fermentation process. The quantity of egg shell remains, egg membranes and any other particles in the processed egg product must not exceed 100 mg/kg of egg product. E. LABELLING AND IDENTIFICATION MARKING In addition to the general requirements for identification marking, consignments of egg products, destined not for retail but for use as an ingredient in the manufacture of another product must have a label giving the temperature at which the egg products must be maintained and the period during which conservation may thus be assured. In the case of liquid eggs, the label referred to above must also bear the words: nonpasteurized egg products, to be treated at place of destination and indicate the date and hour of breaking CHAPTER III: SPECIAL GUARANTEES a. In the case of eggs, packing centers shall provide a guarantee that consignments originate from flocks that have been subjected to a microbiological test with negative results in accordance with legislation. b. The test provided for in subparagraph (a), need not be carried out for consignments intended for the manufacture of processed products by a process that guarantees the elimination of salmonella. c. A certificate stating that the tests referred to in subparagraph (a) have been carried out with negative results, or that the eggs are destined to be used in the manner referred to in subparagraph (b), must accompany consignments. 35

36 13.3. Import tariffs Tariffs that different South Africa applies to eggs originating from possible countries are shown in Table 12 and 13. Equival Table 12: Import tariffs of eggs in a shell 2009 No. Country Product Description (HS:040700) Trade Regime Total Description Tariffs Valorem Tariff Birds eggs, in shell, fresh, 0.00% 0.00% 1 Belgium Preserved or cooked Birds eggs, in shell, fresh, 0.00% 0.00% 2 Brazil Preserved or cooked Birds eggs, in shell, fresh, 0.00% 0.00% 3 China Preserved or cooked Birds eggs, in shell, fresh, 0.00% 0.00% 4 Chinese Taipei Preserved or cooked Birds eggs, in shell, fresh, 0.00% 0.00% 5 France Preserved or cooked Birds eggs, in shell, fresh, 0.00% 0.00% 6 Germany Preserved or cooked Source: MacMap. Table 12 shows that imports of shelled eggs in South Africa are duty free from all possible countries. Table 13: Import tariffs of dried eggs No. Country Product Description (HS:040800) 1 Belgium, Denmark, France, Germany, Italy, Netherlands, Poland & Spain Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened (excl. egg yolks) Trade Regime Description Preferential tariff for European Union countries Preferential tariff for European Union countries 2009 Total Ad Tariffs Valorem Equivalent Tariff 19.00% 19.00% 7.22% 7.22% 19.00% 19.00% 7.22% 7.22% 36

37 No. Country Product Description (HS:040800) China & United State of America 2 Source: MacMap. Dried egg yolks, whether or not sweetened Dried birds eggs, not in shell, whether or not sweetened (excl. egg yolks) Trade Regime Description 2009 Total Ad Tariffs Valorem Equivalent Tariff 19.00% 19.00% 19.00% 19.00% Table 13 shows that South Africa has the preferential applied tariff for European Union countries of 7.22% in South Africa charges of 19.00% for all imports of eggs originating from other countries. 37

38 Table 14: Imports of eggs under Marrakesh Agreement TARIFF DESCRIPTION HEADING Birds Eggs, Not in Shell, and Egg Yolks, Dried, Cooked by Steaming or by Boiling in Water, Moulded, Frozen or Otherwise Preserved, Whether or Not Containing Added Sugar or Other Sweetening Matter EXTENT OF REBATE Full duty less 3.8% ANNUAL QUOTA TONNAGE CONDITIONS FOR THE ISSUING OF PERMITS In addition to the conditions stipulated in Item 2 of the Schedule, the following conditions must be complied with: (a) Permits will be issued on a quarterly basis and will be valid for four months. (b) The quota will be allocated on a ratio basis of 50% for shelled eggs and 50% for liquid eggs and powdered eggs. (c) Bona fide egg producers will be eligible for shelled eggs, while historical importers, wholesalers, processors and distributors will be eligible for liquid/frozen and powdered egg products. (d) Applicants must compare the extent of rebate with the applied rate of duty to determine the most beneficial rate of duty. Source: Government Gazette Notice 1125 of

39 14. COMPETITIVENESS OF THE EGG INDUSTRY COMPETITIVENESS OF EGG IDUSTRY EXPORTS Table 15: List of importing markets for shelled eggs (HS 0407) exported by South Africa in 2009 South Africa s exports represent 0.27% of world exports for shelled eggs; its ranking in world exports is 33. Importers Exported value 2009, USD thousand Trade balance 2009 in USD thousand Share in South Africa's exports, % Exported quantity 2009 Quantity unit Trade Indicators Unit value, (USD/unit) Exported growth in value between 2009, %, p.a. Exported growth in quantity between 2009, %, p.a. Exported growth in value between 2009, %, 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 , %, 'World Tons p.a. Tariff (estimated) 'Zimbabwe Tons '40 'Mozambique Tons '7.5 'Ship stores and bunkers Tons 'Angola Tons '8.5 'Nigeria Tons '20 'Uganda Tons '25 'Cameroon Tons '15 'United Republic of Tanzania Tons '25 'Italy Tons '6.4 'Mauritius Tons '0 'Democratic Tons '12.5 faced by South Africa 39

40 Trade Indicators Total import Exported Exported Exported Share of growth in Tariff Exported Trade Share in growth in growth in growth in Ranking partner value of (estimated) value balance South Exported value quantity value of partner Importers Quantity Unit value, countries partner faced by 2009, 2009 in Africa's quantity between between between countries unit (USD/unit) in world countries South USD USD exports, in world imports, between Africa thousand thousand % 2009, %, 2009, %, 2009, %, imports % p.a. p.a. p.a. 2009, %, p.a. Republic of the Congo 'Kenya Tons '25 Source: ITC calculations based on COMTRADE statistics. 40

41 Table 15 shows that during 2009 South Africa exported a total of tons of shelled eggs at an average value of US$ 1 962/unit. South Africa exported greater quantities of shelled eggs to Zimbabwe, Mozambique and Angola. The greatest share of South African shelled eggs exports were destined to Zimbabwe which commanded 47% share during the year 2009 followed by Mozambique with 25% share and Angola took off 7%. South African shelled eggs export to the world increased by 75% in value while quantity increased by 73% p.a. between the periods 2005 and During the same period, exports value of shelled eggs to Mozambique and Angola also increased by 99% and 55% respectively and exports quantity increased by 36% in Mozambique and 90% in Angola. Exports of shelled eggs from South Africa increased by 150% in value between 2008 and At the same time the value of shelled eggs export to Zimbabwe and Mozambique increased by 8890% and 148% respectively. 41

42 42

43 The chart illustrates that between 2005 and 2009 South Africa s shelled eggs exports to Germany and Italy were growing at a rate that is less than their imports from the rest of the world. During the same period, South Africa s shelled eggs exports to United States of America, Congo, Angola and Mozambique were growing at a rate that is greater than their imports from the rest of the world. Further analysis indicate that Mozambique (99%) and Angola (55%) represent gains in dynamic markets, meaning that South Africa s exports to these countries were growing faster than their imports from the rest of the world. Germany (-51%) and Italy (0%) represent losses in dynamic markets as South Africa s shelled egg exports were declining while the world imports were increasing. Congo (18%) and the United States of America (15%) represent gains in declining markets meaning that South Africa s exports to these countries were growing while their imports from the rest of the world were growing at a rate lower than the world s average. 43

44 44

45 The chart above indicate that Zimbabwe commanded 47.3% of South Africa s shelled egg exports followed by Mozambique, which commanded 25.1%. Together they commanded a total of 72.4% of the South African shelled egg exports. If South Africa wishes to diversify its shelled eggs export, the most attractive market is Uganda. Although is the small market which has a 0% share of world s imports but its annual growth is the highest by 144%. Uganda has a share of 1.35% in South African shelled egg exports, therefore South Africa can concentrate on penetrating the market. The biggest market exist in Germany which has imported shelled eggs from the rest of the world at a rate higher than from South Africa in Although its imports world share is 28.3%, but it s annual growth is 17% which might restrict South Africa from penetrating the market. 45

46 Table 16: List of importing markets for dried eggs (0408) exported by South Africa in 2009 South Africa s exports represent 0.03% of world exports for dried eggs; its ranking in world exports is 44. Importers Exported value 2009, USD thousand Trade balance 2009 in USD thousand Share in South Africa's exports, % Exported quantity 2009 Quantity unit Trade Indicators Unit value, (USD/unit) Exported growth in value between 2009, %, p.a. Exported growth in quantity between 2009, %, p.a. Exported growth in value between 2009, %, 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 , %, 'World Tons p.a. Tariff (estimated) 'Nigeria Tons 'n/a 'Zimbabwe Tons 'n/a 'Kenya Tons 'n/a 'Ghana Tons 'n/a 'Democratic Republic of the Congo Tons 'n/a 'Congo Tons 'n/a 'Angola Tons 'n/a 'Mauritius Tons 'n/a 'Mozambique Tons 'n/a 'United Arab Emirates Tons 'n/a 'Austria 'n/a 'Belgium 'n/a Source: ITC calculations based on COMTRADE statistics. faced by South Africa 46

47 Table 16 shows that during 2009 South Africa exported a total of 99 tons of dried eggs at an average value of US$ 2 141/unit. The greatest share was exported to Nigeria which commanded 34.% followed by Zimbabwe at 28% and Kenya by 27%. South African dried eggs export to the world declined by 16% and 15% in value and quantity respectively between the periods 2005 and At the same period exports value of dried eggs to Zimbabwe increased by 153%. Contrary, exports of dried eggs from South Africa increased by 685% in value between 2008 and 2009 while Zimbabwe increased by 1900%. 47

48 48

49 The chart above illustrates that between 2005 and 2009 South Africa s dried eggs exports to Mozambique were declining by 61% rate while the imports from the rest of the world were declining by 41%. United Arab Emirates was a growing market in the world but there were no growth for exports of dried eggs from South Africa. 49

50 50

51 South Africa is exporting most of its dried eggs to Nigeria, Zimbabwe and Kenya but if it wishes to diversify its dried egg export, the most attractive market exist in Ghana and Democratic Republic Congo due to their annual growth of 109% and 89% respectively. Germany, United Kingdom and Japan are the biggest world markets of dried eggs and have already imported more dried eggs from the world and imported none from South Africa in Furthermore, their annual growth is low at 13%, 20% and -2% respectively and this might be a disadvantage to South Africa to develop a new market in these countries. United Arab Emirates imported more dried eggs from the world compared to what they imported from South Africa; although it has a 0.47% share of South African dried eggs market, with an annual growth of 52%, South Africa has a chance of penetrating their market. 51

52 14.2. COMPETITIVENESS OF EGG INDUSTRY IMPORTS Table 17: List of supplying markets for shelled eggs (0407) imported by South Africa in 2009 South Africa represents 0.04% of world imports for shelled eggs; its ranking in world imports is 74. Exporters Imported value 2009, USD thousand Trade balance 2009 in USD thousand Share in South Africa's imports, % Imported quantity 2009 Quantity unit Trade Indicators Unit value, (USD/unit) Imported growth in value between 2009, %, p.a. Imported growth in quantity between 2009, %, p.a. Imported growth in value between 2009, %, 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 , %, 'World Tons p.a. Tariff (estimated) applied by 'Germany Tons '0 'Chinese Taipei Tons '0 'Belgium '0 'Brazil '0 'China '0 'France '0 'Malaysia '0 'Netherlands '0 'Poland '0 'Spain '0 'Turkey '0 'Angola 580 '0 'Cameroon 75 '0 'Congo 2 '0 Source: ITC calculations based on COMTRADE statistics South Africa 52

53 Table 17 shows that South Africa did not import shelled eggs in 2009 and indicated South Africa s imports of shelled eggs declined by 68% during 2005 to Internationally, Germany s imports declined by 42% during the period 2005 to Germany is the biggest market because it is ranked number 3 in the world s exports of shelled eggs. 53

54 54

55 The chart above illustrates that between 2005 and 2009, Germany was the most growing market of shelled eggs to the world and ranked number 3 in the world s exports but it was a declining market (-42%) to South Africa. Generally the chart does not display any imports competition of shelled eggs by South Africa because South Africa s production of shelled eggs is sufficient for the domestic demand. 55

56 56

57 Germany is the main supplier of shelled eggs to South Africa and commanded 85.71% market share in If South Africa wishes to diversify its shelled eggs import, the biggest markets exist in Netherlands which does not have any share to South African imports market of shelled eggs but has a world market share of 25.5 This country is therefore the biggest prospective supplier for South African shell eggs imports. South Africa can also diversify to Turkey, Brazil and Poland due to their fastest growing annual exports of 77%, 51% and 48% respectively. 57

58 Table 18: List of supplying markets for dried eggs (0408) imported by South Africa in 2009 South Africa s imports represent 0.04% of world s imports for dried eggs; its ranking in the world is 74 Exporters Imported value 2009, USD thousand Trade balance 2009 in USD thousand Share in South Africa's imports, % Imported quantity 2009 Quantity unit Trade Indicators Unit value, (USD/unit) Imported growth in value between 2009, %, p.a. Imported growth in quantity between 2009, %, p.a. Imported growth in value between 2009, %, 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 , %, 'World Tons p.a. Tariff (estimated) applied by 'Denmark Tons 'n/a 'France Tons 'n/a 'Belgium 'n/a 'China 'n/a 'Germany 'n/a 'Italy 'n/a 'Netherlands 'n/a 'Poland 'n/a 'India 'n/a 'Spain 'n/a 'United States of America 'n/a 'Angola 1 'n/a 'Congo 4 'n/a 'Democratic Republic of the Congo 7 'n/a 'Ghana 9 'n/a 'Kenya 57 'n/a South Africa 58

59 Exporters Imported value 2009, USD thousand Trade balance 2009 in USD thousand Share in South Africa's imports, % Imported quantity 2009 Quantity unit Trade Indicators Unit value, (USD/unit) Imported growth in value between 2009, %, p.a. Imported growth in quantity between 2009, %, p.a. Imported growth in value between 2009, %, 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 , %, p.a. Tariff (estimated) applied by 'Mauritius 1 'n/a 'Mozambique 1 'n/a 'Nigeria 71 'n/a 'Zimbabwe 60 'n/a 'United Arab Emirates 'n/a Source: ITC calculations based on COMTRADE statistics. South Africa 59

60 Table 18 shows that during 2009 South Africa imported a total of 54 tons of shelled eggs at an average value of US$ 5 852/unit. The main suppliers were Denmark which commanded 71.5% of South Africa s imports market and France which commanded 28.2% respectively. South African imports market growth rate of dried eggs from 2005 to 2009 increased by 26% per annum (p.a) in value while the growth rate in quantity decreased by 29% p.a during same period. At the same time Denmark s exports of dried eggs to South Africa increased by 16% in quantity. During the periods 2008 to 2009, South Africa s imports of dried eggs increased by 98% p.a while Germany increased by 54% p.a. 60

61 61