The investigation will cover the entire market — from hatchery to shelf.
The Competition Commission of South Africa will investigate the poultry industry to see if competition is fair.
The industry is the largest contributor to the agricultural sector in South Africa, with an annual gross value of production of almost R72 billion. It directly and indirectly employs approximately 134 000 people.
“The South African poultry industry appears to be dominated by a few, large and vertically integrated companies,”
said the commission.
It has been identified that Astral, RCL, Country Bird, and Sovereign are the four largest chicken producers, accounting for nearly 63% of the country’s chicken production.
The commission said it will examine the entire market, from production to sales, to assess whether competition is healthy or if certain practices or structures hinder companies’ ability to compete fairly.
It was found that the market structure may pose significant barriers to independent entry at scale and could potentially encourage conduct that reinforces these barriers.
In terms of scope, the terms of reference indicate that the inquiry will examine whether there are market features that distort competition across the value chain, including pricing and access to key inputs such as genetic stock, parent stock, feed, fertile eggs, day-old chicks, and pullets, as well as abattoirs and cold-chain logistics.
The commission will initiate an inquiry before the end of the year to determine if contract growers are at a disadvantage compared to large poultry producers and how this affects small producers and overall competition.
The commission stated that certain parts of the poultry market may hinder fair competition, preventing businesses and consumers from fully benefiting.
While the exact effects are still being studied, the inquiry could uncover ways to make the industry more competitive and improve consumer benefits.
The poultry sector is South Africa’s largest in agriculture, accounting for nearly 18% of all farm output and 43% of animal products. Most birds are used for meat, while the rest are used for eggs.
Outcome of the inquiry
“In terms of section 43C of the Act, where the commission finds an adverse effect on competition, it must determine the actions required. (...) Specifically, it must consider: whether to make recommendations to any minister, regulator, or affected firm to remedy, mitigate, or prevent the adverse effect; and what specific action should be taken,”
said the commission.
“Under section 43D of the Act, the commission has a duty to remedy adverse effects on competition. It may take steps to remedy, mitigate, or prevent such effects.”
Source: The Citizen
