Figure 1: Broiler meat production* and gross value

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1 Thousand Kilograms Thousand Rands QUARTERLY BROILER MARKET ANALYSIS BULLETIN 4 OF INTRODUCTION The following discussion is a review of the broiler meat market environment. The analysis is updated on a quarterly 1 basis and the interval covered in the current issue is from July 212 to September 213. This period is divided into five, three months long quarters. The key issues discussed in the review are trends in production, price, trade, growth and volatility. 2. PRODUCTION Broiler meat production and supply during the period under review is presented in Figure 1 below. Figure 1: Broiler meat production* and gross value Production Gross value Source: SAPA. * Broiler meat production includes the production of commercial and subsistence farming. Figure 1 above shows that production of broiler meat moved at an increasing trend throughout the period under analysis reaching the new peak during quarter 3 of 213. The gross value of the 1 Quarter 1 (January March); Quarter 2 (April June); Quarter 3 (July September); Quarter 4 (October December) 1

2 Rands/Kg broiler meat produced was stable with slight fluctuations. There is an increase of 6% of broiler meat production and 2% increase of the gross value in quarter 3 of 213 compared to quarter 3 of 212. The increased production might have been motivated by the increase in the rates of customs duties on imported frozen broiler meat. 3. PRICE TREND OF BROILER MEAT Figure 2 below illustrate the average quarterly prices of broiler meat during the five quarters under review Figure 2: Average broiler meat producer prices Source: SAPA. Price The broiler meat market consists of 9% frozen meat and 1% fresh meat. Therefore the average broiler meat prices are calculated from both frozen and fresh broiler meat. The average producer price of broiler meat started low in quarter 3 of 212 and moved at an increasing trend until quarter 4 of 212 before decreasing during quarter 1 of 213. It then increased continually from quarter to quarter 3 of 213. The new peak was reached in quarter 3 of 213 which might me due to the reduced imports into the country. There was an increase of R1.78/Kg in quarter 3 of 213 compared to quarter 3 of IMPORTS AND EXPORTS Volumes and values of quarterly broiler meat exports are presented in Figure 3 below. 2

3 Million Kilograms Million Rands Thousand Kilograms Thousand Rands Figure 3: Quarterly broiler meat exports Quantity Value Source: Quantec EasyData. Figure 3 above indicates that both exports quantity and value moved at an increasing trend during the period under review. Broiler meat exports reached the new peak during quarter 3 of 213. It was not profitable to export broiler meat during the period under analysis except during quarter 3 of 213 mainly due to the weakening of the rand.. Broiler meat export (quantity & value) experienced an exponential increase of 115% and 117% respectively in quarter 3 of 213 relative the same quarter in 212. This is a good indication that South Africa has penetrated the export market. Figure 4 depict quarterly broiler import quantities and values for the five quarters under review. Figure 4: Quarterly broiler meat imports Quantity Value Source: Quantec EasyData. 3

4 The import quantity and value of broiler meat fluctuated but followed the same trend throughout the period under review. The increases experienced were mainly due to alleged dumping of broiler meat into the country. The slight decrease of broiler imports experienced during quarter 3 of 212 was due to provisional measures applied against Brazil which lapsed during quarter 3 of 212 whereas the drastic increase during quarter 4 of 212 was due to the lifting of the provisional measures. The decrease during quarter 3 of 213 might be due to the increased rates of customs duties on imported frozen broiler meat. Imports (quantity & value) increased by 15% and 5% respectively during quarter 3 of 213 compared to the same quarter in 212. This shows that South Africa still imports significant amounts of broiler meat. Broiler imports are expected to decrease in the coming months due to the increased import tariffs. 5. GROWTH, VOLATILITY AND STABILITY. Broiler meat industry growth was calculated using the least squares method. Y = b + b1x. Where Y : Values. b : Intercept. b1 : Slope. X : Observations. The volatility and stability measures were determined by calculating the coefficient of variation for the various beef industry statistical series. The formulation for these values is as follows: ( xi ) V 1 N 1 where : V Coefficien t of Variation. S tan dard Deviation mean x i obervations in quarter i. N Number of quarters. The outcomes of these growth and volatility calculations are presented in Table 1. They are calculated using quarterly statistics and covered the same five, three months long quarter period under review beginning in July 212 and ending September

5 Table 1: Broiler meat industry growth rates and coefficients of variation from July 212 to September 213 Growth Rate Category Sub-category (%) Coefficient of Variation Production Volume Gross value Value Producer Price Price Exports Volume Value Imports Volume Value Source: Quantec EasyData & SAPA. Table 1 indicates that during the period under analysis domestic broiler meat production, gross value, producer price, export (volume &value) and imports (volume & value) experienced a positive growth of 1.47%, 3.81%, 2.34%, 17.74%, 17.7%, 1.97% and 7.19% respectively. Table 1 also depicts the levels of volatility/ stability at different levels of the broiler meat industry s quarterly figures over the period (July 212 to September 213). Broiler meat production, gross value, producer price, exports and imports were relatively stable during the period under review with coefficient of variation ranging from.2 and.3. 5

6 6. ACKNOWLEDGEMENTS Acknowledgement is given to the following information sources: a. South African Poultry Association (SAPA) b. Quantec EasyData For more information contact: Director: Marketing Private Bag X 15 Arcadia 7 Tel: (12) Fax: (12) MogalaM@daff.gov.za Website: http// Acting Deputy Director: Commodity Marketing Tel: (12) Fax: (12) ElvisN@daff.gov.za Senior Agricultural Economist (Livestock) Tel: (12) Fax: (12) PhinaB@daff.gov.za Disclaimer: This document and its contents have been compiled by the Directorate: Marketing within the Department of Agriculture, Forestry & Fisheries for the purposes of detailing the broiler meat market. Anyone who uses this information does so at his/her own risk. The views expressed in this document are those of the Department of Agriculture, Forestry & Fisheries with regard to the industry, unless otherwise stated. The Department of Agriculture, Forestry & Fisheries therefore, accepts no liability for losses incurred resulting from the use of this information. 6