Projections of oilcake demand for animal use in 2010, 2015 and 2020
Compiled by JSG Joubert (March 2008)

  1. Introductory notes

    1. As in the past the APR model was used, to determine the protein consumption per animal species which amounted to 1 806 227 tonnes in the 2006/07 base year. It is also indicated according to protein source per species (see table 1).
    2. Due to the limitations of the APR model, as mentioned in last year's report, the Nieuwoudt-McGuigan model is used as a sup­plementary model for the 2010 and 2020 projections for protein demand.
    3. It was not possible to use the LSM (living standard of measure) as a parameter for projection purposes, because other information, such as economic growth required could be obtained only per race group. It also proved impossible to obtain the population growth rate, income elasticities and consequently per capita consumption per LSM group at this stage.
    4. Statistics for the population growth rate are the same as for last year as determined by the BMR (Bureau of Market Research). No updated data relating to income elasticities was available and last year's figures were used again. The improved feed turnover information relating to poultry was implemented.
    5. In co-operation with the University of Pretoria and the University of the Free State, PRF also developed a scenario based on the University of Pretoria's BFAP (Bureau for Food and Agricultural Policy) model. It was decided that information generated from this model would be used as input to create more accurate projections of protein demand. Due to practical considerations, very little of this year's projections were based on the information obtained from this model.

      Table 1

      Total protein consumption per animal species 2006/2007
      Soy oilcake Full-fat soy Sunflower oilcake Cotton oilcake Canola oilcake Gluten 60 Canola full-fat Fishmeal Poultry by-products Total
      SPECIES .. Broilers
      348 281 255 640 0 0 0 26 040 2 000 13 838 84 946 730 745
      SPECIES .. Broiler breeding hens
      108 513 0 9 287 0 134 0 0 0 117 934
      SPECIES .. Laying hens
      170 476 0 32 078 10 047 287 0 0 0 212 888
      SPECIES .. Sheep
      0 0 18 377 2 933 0 0 0 0 21 310
      SPECIES .. Cattle
      0 0 37 610 98 783 0 0 0 0 136 393
      SPECIES .. Pigs
      137 050 0 50 736 0 9 038 0 0 14 023 9 430 220 277
      SPECIES .. Dairy
      54 338 0 160 106 17 633 6 405 0 0 0 238 482
      SPECIES .. Ostriches
      2 015 0 2 467 2 210 2 832 0 0 0 9 524
      SPECIES .. Horses
      5 973 0 12 960 650 304 0 0 0 19 887
      SPECIES .. Aqua culture
      776 0 0 0 0 0 0 1 302 2 078
      SPECIES .. Dogs and cats
      69 140 0 27 569 0 0 0 0 0 96 709
      Total
      896 562 255 640 351 190 132 256 19 000 26 040 2 000 29 163 94 376 1 806 227

  2. Projected protein demand

    1. The period 2006/2007, used as base year for the projections, relates to the period 1 April 2006 to 31 March 2007.
    2. The protein consumption for the base year used as departure point, was 1 806 227 tonnes determined by means of the APR model. It includes 29 163 tonnes fishmeal, 94 376 tonnes poultry by-products and 26 060 tonnes gluten 60.
    3. The 2010 and 2020 projected protein demand is higher than reflected in last year's report, mainly due to the large difference in protein consumption for the base year. The protein consumption for the 2005/2006 base year was 1 481 379 tonnes compared to the current base year's 1 806 227 tonnes.
    4. The increased consumption from the base year 2005/2006 to the base year 2006/2007 may be ascribed mainly to an increase in consumption by dairy, pigs, cattle and poultry (compare table 1 for last year with the same table in this report).
    5. This report focuses on the expected consumption of oilcake and therefore the fishmeal, poultry by-products and gluten 60 were deducted from the projected protein demand. For projection purposes, it is assumed that quantities for the latter three protein sources would remain unchanged. If these were to change, it will have a significant impact on the oilcake demand, because the substitution rate between oilcake and fishmeal is 1,4. It is also more than 1 for gluten 60 and poultry by-products.
    6. The 2010 and 2020 projections are based on four (4) scenarios:
      • High income growth and retaining protective tariffs.
      • High income growth and phasing out protective tariffs.
      • Low income growth and retaining protective tariffs.
      • Low income growth and phasing out protective tariffs.

      Table 2

      2010 and 2020 projections of protein demand for four (4) different scenarios ¹
      Scenario Base year 2006/2007 Annual growth
      from base year      		 2010 Annual growth
      from base year      		 2020
      Tonnes % Tonnes % Tonnes
      Scenario 1 1 806 227 3.45 2 068 342 3.26 2 830 993
      Scenario 2 1 806 227 -0.13 1 797 182 1.98 2 375 971
      Scenario 3 1 806 227 2.20 1 970 260 2.14 2 430 010
      Scenario 4 1 806 227 -0.97 1 737 042 0.91 2 050 143

      ¹   Scenario 1: High income growth and retaining protective tariffs.
      Scenario 2: High income growth and phasing out protective tariffs.
      Scenario 3: Low income growth and retaining protective tariffs.
      Scenario 4: Low income growth and phasing out protective tariffs.

      Note 1 – Import tariffs on livestock and livestock products

      • The high income growth scenario was based on 3,9% per annum, while it is 2,0% per annum for the low income growth scenario.
      • Tabel 3 indicate population growth figures as determined by Unisa's BMR.

      Table 3

      Population growth per annum from 2006
      Period Blacks Asians Coloureds Whites Total population
      % per annum
      To 2010 0.44 0.65 0.63 -0.36 0.37
      To 2020 0.64 0.36 0.35 -0.54 0.49

  3. Local production of oilcake versus total demand

    The main objective of the exercise is to determine to what extend local oilcake production keeps pace with projected consumption. In addition it is necessary to decide which one of the four (4) scenarios simulates the actual situation the best. The current economic parameters, the medium-term estimates and the fact that protective tariffs on the imports of livestock products will probably remain in place, indicate that scenario one (1) is probably the most appropriate.

    1. Projected 2010 and 2020 oilcake demands are the projected protein demand less fishmeal, poultry by-products and gluten 60. Therefore the 2010 projected oilcake demand is 1 918 763 tonnes and the projected demand for 2020 is 2 681 414 tonnes.
    2. In the 2006/07 base year the actual oilcake consumption, according to the AFMA Annual Report was 1 635 525 tonnes and the local production of oilcake was 608 370 tonnes. This means the local production in terms of total consumption was 37,2%. During 2005/2006 this percentage was 40,5% and for 2004/2005, it was 34,4%. The scope of locally produced oilcake depends on many factors, such as climate and price ratios of commodities, therefore the averages for the said three seasons are assumed for this exercise.

    Table 4

    Locally produced oilcake as percentage of total consumption
    Period Locally produced oilcake Total consumption of oilcake Percentage of total consumption
    Tonnes Tonnes %
    2004/2005 416 736 1 212 593 34.4
    2005/2006 572 231 1 414 338 40.5
    2006/2007 608 370 1 635 525 37.2
    Average 532 446 1 420 819 37.5

  4. Required growth rates for local oilcake production to provide for the projected consumption demand

    Based on the information above, it is possible to determine the required annual growth rate for local oilcake production to supply about 38% of the total demand.

    It is also possible to determine the annual growth rate required for local production of oilcake to narrow the gap between local production and projected consumption. Lastly it is possible to determine the percentage of locally produced oilcake as part of the projected 2010 and 2020 consumption if local production were to increase at the historical annual growth rate (see table 7).

    Table 5

    Locally produced oilcake as percentage of projected oilcake demand in 2010
    Projected consumption 2010 Local production growth rate per annum Quantity oilcake Percentage of projected consumption
    Tonnes % Tonnes %
    1 918 763 8.18 729 130 38
    1 918 763 15.86 959 382 50
    1 918 763 30.30 1 535 010 80
    1 918 763 37.78 1 918 763 100
    Local growth at historical rate
    1 918 763 6.36 681 379 35.5

    Table 6

    Locally produced oilcake as percentage of projected oilcake demand in 2020
    Projected consumption 2020 Local production growth
    rate per annum    		 Quantity oilcake Percentage of projected consumption
    Tonnes % Tonnes %
    2 681 414 4.75 1 018 937 38
    2 681 414 6.82 1 340 707 50
    2 681 414 10.47 2 145 134 80
    2 681 414 12.24 2 681 414 100
    Local growth at historical rate
    2 681 414 6.36 1 262 327 47

    Table 7

    Production and consumption trends of protein commodities
    96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08
    COMMODITY: Fishmeal consumption (tonnes)
    196 039 187 374 96 267 127 386 142 848 118 414 82 988 127 000 127 000 80 000 60 000
    Average annual growth %:   -6.46
    COMMODITY: Fishmeal production (tonnes)
    78 430 100 000 88 340 95 000 110 000 128 000 123 000 122 000 132 000 101 000 87 000 2.17
    Average annual growth %:   2.17
    COMMODITY: Fishmeal imports (tonnes)
    117 809 87 374 7 927 32 386 32 848 0 0 0 0 0 0
    Average annual growth %:   48.30
    COMMODITY: Oil cake consumption (tonnes)
    832 600 785 401 1 080 354 1 063 338 1 021 862 1 149 224 1 210 396 1 121 460 1 212 593 1 414 338 1 635 525
    Average annual growth %:   7.73
    COMMODITY: Oil cake production (tonnes)
    400 675 319 006 493 581 554 903 514 020 482 448 472 311 489 413 416 736 572 231 608 370
    Average annual growth %:   6.36
    COMMODITY: Oil cake imports (tonnes)
    431 925 466 395 586 773 508 435 507 842 666 776 738 085 632 047 795 857 842 107 1 027 155
    Average annual growth %:   10.17
    AREA PLANTED (ha)
    COMMODITY: Soybeans (ha)
    87 000 125 000 130 500 93 787 134 150 124 150 100 150 135 000 150 000 240 570 183 000 165 800
    Average annual growth %:   9.92
    COMMODITY: Sweet lupins (ha)
    NA NA 16 300 19 000 14 705 14 785 11 000 10 100 7 100 14 100 16 000 14 000
    Average annual growth %:   3.40
    COMMODITY: Canola (ha)
    NA NA 17 000 25 000 19 145 27 000 33 000 44 200 44 250 40 200 32 000 33 260
    Average annual growth %:   10.59
    PRODUCTION (tonnes)
    COMMODITY: Soybeans (tonnes)
    76 806 120 000 200 900 188 367 148 720 209 705 216 000 136 500 220 000 272 500 424 000 205 000
    Average annual growth %:   17.50
    COMMODITY: Sweet lupins (tonnes)
    NA NA 9 000 13 000 17 360 16 338 11 700 4 040 3 950 14 100 14 400 13 300
    Average annual growth %:   25.27
    COMMODITY: Canola (tonnes)
    8 734 11 000 21 000 23 000 26 549 25 750 37 975 40 770 32 000 44 200 38 050 39 840
    Average annual growth %:   -18.28

    Figure 1

    Oilcake consumption, production and imports

    Graph showing oilcake consumption, production and imports

    Figure 2

    Areas and production of protein commodities

    Graph showing areas and production of protein commodities

  5. Remarks and conclusions

    1. The projected 2010 and 2020 demand for protein is significantly higher than that reported last year. It results from the actual protein consumption that was significantly higher in the base year used for the projections. The Government's tariff policy had the largest impact on the projected protein demand. Should rates on livestock and livestock products be reduced or removed, it would decrease the demand for imported protein dramatically.
    2. The increased consumption related to poultry, cattle, pigs and dairy. Soy oilcake and cotton oilcake were the most important components that contributed to the increase.
    3. If oilcake production were to increase at the historical rate of 6,36%, there would be room for an additional 1 237 384 tonnes in 2010 and 1 419 087 tonnes in 2020. It is doubtful whether this growth rate could be maintained without a substantial contribution by a bio-fuel industry. Larger quantities will have to be imported with accompanying adverse effects on the economy.
    4. The historical growth rate of oilcake consumption and oilcake imports remain higher than the historical growth rate of oilcake production (see table 7 and figures).
    5. Respectively the area increase of soy and canola per annum are 9,92% and 10,59%, lower than indicated in last year's report (11,85% and 12,26%), yet it does present a positive trend. The area increase for lupins is less positive at 3,4% and it is lower than last year.
    6. It is important that the quantities produced for the three (3) crops over time are much higher than the increased planting areas. Climate also played a role, but the impact of research and technology transfer definitely played a role too.
    7. Oil seed and grain crop prices dramatically increased locally and internationally due to a bigger demand, climatic conditions, decreasing stock levels and the effects of the bio-fuel industry. In spite of higher price levels, the price ratio between soy and grain crops was beneficial to the latter.
    8. The main consideration that influences a producer to plant more or less of a crop, is the relative profitability of the crop. A producer can only improve profits per hectare by improving the unit yield, as well as, improving the ratio between yield and input, because he can do little or nothing to influence the commodity price. The benefits of rotation crops cannot be over emphasised. These are aspects that need to be considered and investigated by PRF.