Reports / Research Reports / 2012/2013 / Sources Of Protein

Research Report 2012/2013

4.

 

Sources of protein


Index


4.1

 

International


4.1.1

 

General


During the year under review the production and supply of oil- and protein-rich seeds was subject to unstable climatic conditions, logistical problems and political interference in the market.

The international closing stock comprising the seven most important oilseeds for the 2011/2012 season was 66,1 million tonnes, 22,6 million tonnes less than the closing stock for the previous season (2010/2011). Soybeans were the main cause of the lower tonnage because the closing stock declined by 21,1 million tonnes to only 54,1 million tonnes for the 2011/2012 season.

The closing stock for the 2012/2013 season was 75,3 million tonnes, resulting from an increase in production of the seven oilseeds from 434,6 to 459 million tonnes for the 2012/2013 season. The biggest increase was in the production of soybeans, showing an increase of 27 million tonnes. Cotton seed, sunflower and canola did not show major deviations.

4.1.2

 

Soybeans


At the beginning of the year under review the South American soybean harvest was expected to remain at 14 million tonnes less, in spite of the late rains reported in Argentina. It was estimated that world soya production would decline by 20 million tonnes compared to the previous year (2010/2011). In fact the total world soya production for 2011/2012 (October / September) was 26 million tonnes lower than in the corresponding period in 2010/2011. This resulted in a materially lower world soya stock by the end of August 2012. The total soya production for the 2011-2012 season (October / September) was 238,9 million tonnes compared to 264,9 million tonnes recorded in the preceding season. This resulted in a strengthening of futures prices at the beginning of the year under review. A reduction in international rapeseed and canola production also contributed to the soya price increase. During the year under review, soya also experienced strong surface competition with other crops, not only in the USA, but also in other producing countries. China reported that government policy dictated that it would plant more maize at the expense of soya, because the country wished to be more self-sufficient in terms of grain crops.

Soya has stood firm in the fight for land based on the favourable soya / maize price ratio on the Chicago Board of Trade (CBOT) futures market. The price ratio was 2,3:1 on 8 March 2012 (November soya:December maize). This was a huge improvement compared to the 2,1:1 ratio at the beginning of February 2012.

In terms of the 2012/2013 (October/September) season futures soya prices were supported by the harvest risks in South America and the huge demand in China. Planting of grains and oilseeds was delayed due to unfavourable climatic conditions. In Argentina, 13 to 16 million hectares of agricultural land were flooded or were too wet for planting. Brazil experienced problems of the opposite nature. There, producers battled with a low soil moisture content on almost half the area earmarked for soya.

During the last week in February 2013, the futures prices of soya and soya oilcake strengthened, mainly due to the delays in exports from South America. Soya oilcake achieved the highest prices in the soya complex, while soya oil achieved the poorest prices in the complex.

The Argentinean government placed significant pressure on producers to market more actively. The government wants to accelerate the export of old stock as the government needs urgently to earn income from export tax. The producers' reluctance to sell old stock arises from the unfavourable exchange rate determined by the government and the high inflation rate of at least 30%. Producers are waiting for devaluation and a new exchange rate that will correspond closer to the actual value of the currency. Brazil's harvest expectation for the 2012/2013 season will not be as significant as estimated initially, but it will still be a record harvest. Harvest estimates initially varied between 80,1 to 81,2 million tonnes. These estimates are significantly higher than the 66,4 million tonnes for the previous season.

Brazil's biggest problems remain infrastructure bottlenecks and a shortage of transport vehicles. These factors caused a dramatic increase in transport costs to the respective harbours and resulted in declining farm gate prices for producers. Prices declined further due to the lower quality of beans delivered because of high moisture content. Transport costs from central Mato Grosso to the Paranagua harbour increased by 60 to 80% compared to prices a year earlier. Reasons mentioned for the dramatic increase in transport costs include the poor road conditions, new legislation that requires truck drivers to adhere to longer rest periods, higher diesel prices and a truck shortage. Transport profit margins are too low and trucks moved to southern Brazil where transport profit margins are higher.

Soya oilcake prices benefitted from the lower soya harvest estimates in South America in the 2010/2011 season. The decline in ethanol production in the USA contributed to this, because it resulted in a lower supply of distillers dried grain with solubles (DDGS).

4.1.3

 

Canola


Rapeseed and canola prices also strengthened compared with those at the beginning of the year under review. Canada benefited from the lower harvests in other countries because the demand for Canadian canola increased. Naturally this resulted in lower stock levels in Canada by the end of the Canadian season. According to expectations this situation will change during the 2012/2013 season largely because Canadian and Australian producers indicated that they will plant more.

Canola remains the second most important oilseed in the world. It maintains a relatively constant international tonnage.

Total production over the past three years was –

2010/2011 61,8 million tonnes
2011/2012 61,4 million tonnes
2012/2013 63,9 million tonnes

However, closing stocks trended downward –

2010/2011 7,1 million tonnes
2012/2013 5,3 million tonnes

The largest three producing countries were –

EU 19,65 million tonnes
Canada 14 million tonnes
China 12,5 million tonnes

4.1.4

 

Other


International sunflower production fluctuated significantly over the past three years, mainly due to climatic factors.

2010/2011 33.6 million tonnes
2011/2012 39.56 million tonnes
2012/2013 35.6 million tonnes

The three most important producing areas achieved as follows –

2010/2011 2011/2012 2012/2013
EU 7.0 million tonnes 8.3 million tonnes 7.0 million tonnes
Russia 5.8 million tonnes 9.5 million tonnes 8.0 million tonnes
Ukraine 8.0 million tonnes 9.5 million tonnes 8.4 million tonnes

The global fishmeal production for the first six months of 2013 is up to 10% lower compared to 2012. Global stocks are low but prices are declining due to lower demand, mainly from China's aquaculture industry that was affected by recent poor weather conditions. In addition, alternatives to fishmeal, such as soya concentrates, are being used in aquaculture. Global fishmeal production for the period October 2010 to September 2011 was 5,01 million tonnes. The comparative 2011/2012 production was 4,98 million tonnes and Oil World estimates the 2012/2013 production to be only 4,3 million tonnes.

Between April and June 2013 the fishmeal production in Peru declined to a 10-year low. On 24 July 2013 prices were US$1 450 (R14 500) for FAQ standard meal and US$1 600 (R16 000) for Super Prime.

Peru has changed its fishing regulations. Only anchovy landings for non-human consumption may be used for fishmeal. Landings from small vessels within the 10 mile zone are dedicated for direct human consumption. Up to 40% of the latter is being processed as unrecorded landings and could comprise between 100 000 and 200 000 tonnes.

4.2

 

Local


4.2.1

 

General


The demand for oilcake and fishmeal comprised 1 865 360 and 45 000 tonnes respectively for the marketing year (1 April 2011 to 31 March 2012). No imported fishmeal is used, but 1 089 433 tonnes (59%) oilcake was imported. The comparative consumption for the previous period (1 April 2010 to 31 March 2011) was 1 857 490 tonnes oilcake and 37 000 tonnes fishmeal. In 2011/2012 there was an increase of 21,6% in the consumption of fishmeal, but a marginal decline of 0,1% in the consumption of oilcake. AFMA's 2012 Annual Report estimates the oilcake consumption in the 2012/2013 marketing year to be 2 200 000 tonnes. In the opinion of the PRF the estimate is too high and it was reduced to 1 900 000 tonnes.

During preparation of this report, the actual consumption figures for six months by AFMA members for the 2012/2013 marketing year were known. If those figures were to be translated to figures for 12 months, they comprise consumption of 1 313 286 tonnes oilcake by AFMA members and 54 710 tonnes fishmeal consumed by AFMA members. At this stage the fishmeal consumption by AFMA members already exceeds the total fishmeal consumption (45 000 tonnes) reported for the previous marketing year. This may be ascribed to good fishing figures for the first part of 2012 and the relatively low fishmeal prices (R6 500-R7 500 per tonne). Comparative soya oilcake prices were relatively high, as mentioned in 4.1.1 of the report.

According to the SA Fishmeal Marketing Company, fishing figures for the period January to April 2013 were very poor. During the corresponding period of the previous year 130 000 tonnes more fish were harvested. Currently the inland price of fishmeal is R12 000 to R13 000 per tonne. The results of these figures will probably be reflected in the 2013/2014 marketing year figures. There was good progress with soya production locally, comprising 560 950 tonnes in the 2010/2011 marketing year (311 450 ha), 710 000 tonnes in the 2011/2012 marketing year (418 000 ha), 650 000 tonnes in the 2012/2013 marketing year (472 000 ha) and 851 000 tonnes estimated for the 2013/2014 marketing year (estimated at 516 000 ha).

This reduces the pressure on imported oilcake and the expected oilcake imports for 2012/2013 will be 981 820 tonnes compared to more than one million tonnes in the previous two years.

The up-scaled oilcake consumption by AFMA members for 2012/2013 (1 313 286 tonnes) indicates a slight decrease compared to the actual consumption of 1 329 126 tonnes in the previous year. The decline is mostly due to reduced use of full fat soya and soya oilcake. Factors that played a role may be the more favourable fishmeal / soya oilcake price ratio as well as the lower increase in local poultry production. Poultry is the largest consumer of oilcake. Soya oilcake remains the most important source of protein for AFMA members and comprised 75,9% of the total oilcake consumption during the 2011/2012 marketing year. The estimated consumption for the 2012/2013 marketing year is 70,7%. This figure includes full fat soya, translated into a soya oilcake equivalent.

4.2.2

 

Local protein production


4.2.2.1

 

Soybeans


The effects of the market situation on soya and soya product prices were mentioned above. However, soya oilcake was the price leader in this regard. CBOT prices recorded from mid-January until May 2012 increased by 44% to US $435 per short tonne. The effect on the landed price of 47% protein oilcake at Durban is also clearly apparent. As an example, on 5 March 2012 the landed price of soybean oilcake (47% protein) in Durban was R3 641 at an exchange rate of R7,55/US$. Two months later (2 May) the price was R4 451 at an exchange rate of R7,72/US$. On 24 July the price was R6 000 per tonne, further strengthened by an even weaker exchange rate.

Prices of imported soya oilcake declined slightly after that period, but it remained significantly higher than at the beginning of the year under review. In October 2012 the landed price in Durban was R5 860 per tonne and at the beginning of 2013 it was about R5 500 per tonne.

For the first harvest estimate of March 2012 the area planted under soybeans was 472 000 ha. At an expected yield of 755 950 tonnes it repre­sented the largest harvest ever. According to the Harvest Estimate Committee the increase comprises 45 950 tonnes or about 6,5% more than the estimate of 710 000 tonnes for the previous season.

According to figures for February 2013 only 650 000 tonnes were produced. Due to largely negative agricultural conditions the average yield for 2012 (1,39 t/ha) is 18,2% lower than the average yield of 1,7 t/ha for the previous season, 0,34 t/ha lower than the previous five-year average of 1,73 t/ha and 0,33 t/ha lower than the previous 10-year average of 1,72 t/ha.

The average yields in the most important provinces for 2011 and 2012 were –

2011 T/Ha 2012 T/ha
KwaZulu-Natal 2.71 2.40
Limpopo 2.50 2.30
North West 2.50 1.50
Mpumalanga 1.55 1.30
Free State 1.41 1.15

These figures reflect the immense effect of seasonal rainfall and heat during critical phases of soybean production between January and March. According to the February 2013 harvest estimate, 515 000 ha was planted under soybeans in the 2012/2013 season, representing an increase of 9,1% compared to the 2012 season.

According to the Crop Estimate Committee the number of hectares planted to soybeans, per province, compared to the previous year was –

2012 2011 Change
Northern Cape 500 ha 500 ha 0 ha
Free State 175 000 ha 135 000 ha +40 000 ha
Eastern Cape 500 ha 1 000 ha -500 ha
KwaZulu-Natal 34 000 ha 34 000 ha 0 ha
Mpumalanga 200 000 ha 190 000 ha +10 000 ha
Limpopo 22 000 ha 23 500 ha -1 500 ha
Gauteng 19 000 ha 14 000 ha +5 000 ha
North West 21 000 ha 20 000 ha +1 000 ha
Total 472 000 ha 418 000 ha +54 000 ha

A few years ago the PRF set a goal of one million tonnes on 500 000 ha for soybeans in 2015. This goal, considered against the current momen­tum within the local soya industry, could have been achieved during the 2013 planting season.

The PRF also set a target of 33:67 for soya:maize as a rotation ratio. This represents a soya planting area of about one million hectares, which has been set as a new target for 2020.

Additional estimates included reference to 750 000 hectares of soya, or a yield of one million tonnes soya that will be required by 2015 if the expected increase in crushing capacity were to be realised. By February 2013 a crushing capacity of 600 000 tonnes was available, with significant additional expansions being built.

Graph

RSA: Soybeans area planted

2001-2013

Graph showing soybean area planted 2001-2013
Source.  National Crop Estimate Committee

The graph prepared by the Crop Estimate Committee, showing the area planted under soybeans since 2001, provides perspective. The PRF is particularly proud of the annual increase since 2008, as well as the constantly increasing trend. The increased awareness of producers in terms of conservation farming, and the importance of soybeans as a rotation crop in such a system, combined with good prices, has obviously made the soybean industry the strongest growing industry in the agricultural sector over the past six years. This process is supported by new cultivars that are being made available in South Africa, new seed companies that have entered the market and, especially, new entrants in the oil crushing industry that will have available the most modern equipment to produce the same quality soybean meal as that currently being imported, mainly from Argentina. The Elite soybean trials, initiated by the PRF, that are playing such an important role in the sustained vitality of the soya industry are also discussed elsewhere in this report.

During the past year the meetings of the soya working group that coincided with the Soybean and Sunflower Forum, were generally well attended. This contributed positively to the promotion of the soybean industry. Several speakers provided useful input and these presentations were followed by lively discussions of the topics.

There was good media coverage of the soybean industry during the year, with much input and encouragement from the PRF. We should continue to distribute information in this way, particularly to the western parts of South Africa where there is a growing interest in soybeans.

4.2.2.2

 

Canola


During the past two years the canola industry succeeded in escaping from a stagnant position. The PRF is grateful that its renewed efforts to stimulate the industry seem to have been successful.

The 2012 year was marked by various highlights. The most important was that 79 650 tonnes was produced, at the highest average yield per hectare ever achieved, namely 1,79 tonnes per hectare.

Graph

Canola – yield and planted

1992-2012

Graph depicting canola yield and planted 1992-2012

It was quite clear that this achievement was not merely due to the favourable climatic conditions, which included above-average and well-distributed rainfall, but was also due in large part to the PRF's investment in the evaluation and establishment of the best available cultivars. These were the first fruits of a concerted effort by the PRF to promote canola production in the country. The achievement finally lays to rest the perception that South African farmers plant unsuitable cultivars.

The target of 75 000 tonnes on 50 000 ha by 2015 has been exceeded. As more producers accept canola as a cash crop in its own right the growth will remain sustainable.

Prof André Agenbag's role in technology transfer and his expertise must not be underestimated. It is very clear during visits to farms that he has been instrumental in improving the growing practices which has led to better yields.

The visit by Phil Thomas, Mr Canola of Canada, was one of the most informative, interesting and uplifting foreign visits to the Western Cape yet. Both producers and advisers/experts in the canola industry participated and shared in the transfer of knowledge. We will reap the results in future. Mr Thomas's presentation at the SKOG day at Langgewens on 6 September 2012 elicited widespread interest.

An investigation by Mr SG Ferreira, a PRF contractor, assisted by Messrs JSG Joubert and A Theron, both PRF Board members, entitled Relative Profitability of Basic Rotation Systems: Swartland ("Relatiewe Winsgewendheid van Basiese Wisselboustelsels: Swartland"), confirms the potential of canola not only as a rotation crop but as a profitable competitive commodity in its own right. This investigation focussed on the Swartland only, as the PRF canola task team feels that this area has the biggest short-term potential for expansion. Canola offers a very cost effective and profitable alternative to the wheat monoculture system.

Various other rotation systems applied in this area were also identified and investigated. Gross margins were calculated separately for alternative systems. The system that allows canola growing on 25% of the farm area each year, achieved the best results. Producers and role players in the area showed a positive response to the report and it is now used as a marketing aid. (Other research projects that support the canola industry are discussed in more detail below).

The PRF action to promote canola in the Western Cape is supported largely by researchers in the Department of Agriculture in the Western Cape (DAWC). The PRF canola working group, attended by researchers from the ARC, DAWC, agricultural companies, co-operatives, seed companies and others, remains the backbone that provides direction for the canola industry. This working group is supported particularly well, and discussions at the meetings definitely stimulate more interest in expanding the industry. Canola Focus is an informative publication sponsored by the PRF and it is a privilege for the PRF to acknowledge its editorial team comprising Messrs P Lombard, J Bruwer and Prof G A Agenbag.

Other actions to promote the canola industry to a wider audience take place regularly.

A canola planning work session was held on 2 and 3 February 2012. All relevant Agribusiness representatives in the Western Cape were invited to attend the planning discussions to determine the road ahead within each area of expertise. Included in the discussions were the identification of the roles each person or group, including the PRF, could play in the process and the definition of any assistance or aids that might be required.

The session established a more positive attitude toward the canola industry. Objectives and focus areas for expanding the industry were identified. Follow-up discussions to evaluate outcomes will take place in the new season.

4.2.2.3

 

Sunflower


Sunflowers remain an important source of protein to supply the South African demand. Until two years ago, when soybean production surpassed sunflower production for the first time, sunflowers were the main local source of protein for animal consumption.

The graph below shows that sunflower production is following a declining trend, but it is still supplemented by imports.

Graph

RSA Sunflower seed – area planted

2001-2013

Graph showing sunflower seed planted 2001-2013
Source.  Crop Estimate Committee

Sunflower oilcake imports were as follows for the past two years –

2010/2011 57 159 tonnes imported
2012/2013 165 000 tonnes imported

It is undeniable that the sunflower industry will require a significant push in the near future to allow it to regain its previous status.

4.2.2.4

 

Other


The consumption of fishmeal is determined by the fishmeal price and prices of competitive products. Fishmeal as a source of protein is being replaced to an increasing extent by high quality soybean oilcake. During the previous two years only about 30 000 tonnes of fishmeal was consumed each year, but the figure increased to 48 875 tonnes in 2012/2013.

Local and Imported Fish Meal – 2010 to 2013
2010/2011 2011/2012 2012/2013
Local production: RSA ¹ 72 000 90 000 70 000
Namibia ¹ 10 000 5 000 5 000
Sub Total 82 000 95 000 75 000
Imports ² 0 0 0
Russian Trawlers ³ 12 000 10 000 10 000
Total fish meal available 94 000 105 000 85 000
Exports
South African product 35 000 45 000 35 000
Namibian product 10 000 5 000 5 000
Russian trawler product 12 000 10 000 10 000
Total available in SA and Namibia 37 000 45 000 35 000

¹  Estimate by Fish Meal Marketing Company, Oceana Afriproducts (Pty) Ltd, UFE & NAMSOV
²  Customs & Excise
³  All the Russian trawler meal and some local fish meal has been exported
Source.  AFMA Chairman's Report – 2012/2013

The local fishmeal production for January to June 2013 was 24 000 tonnes, significantly lower than in recent years.

The South African fishing industry experienced major problems with the Department of Agriculture, Forestry and Fisheries (DAFF). No vessels were available due to poor maintenance. An industry vessel had to be chartered to conduct the surveys to determine the Total Allowable Catch (TAC) and quotas. In 2013, fishing started late due to poor fish availability. The water temperature was too high for shoals to enter the allocated fishing zones.

4.2.3

 

Processing of legume crop products


4.2.3.1

 

Full fat producers


According to the AFMA Chairman's Report for 2012/2013, the inclusion of full-fat soya in animal feeds fluctuated between 1 and 3%. The highest consumption in 2011/2012 was 165 000 tonnes.

According to the SAGIS figures, full-fat soya was used as follows during the past three calendar years –

2010 160 300 tonnes
2011 111 500 tonnes
2012 114 600 tonnes

These figures are expected to increase dramatically in the near future.

4.2.3.2

 

Oil crushing industry


According to information obtained from SAGIS and the Crop Estimate Committee at DAFF, an average of 111 300 tonnes soybeans was crushed annually in the past 10 years.

The development of the soya industry changed the situation and a significant upward trend is clear.

According to SAGIS, the average tonnes of soybeans crushed for oil over the past three years were –

2010 145 300 tonnes
2011 192 400 tonnes
2012 296 000 tonnes

The growth in the soybean meal processing industry has gone from strength to strength. The constraint on expansion of production put forward by the soybean producers of production capacity has been addressed and eliminated until an estimated 2020.

The processing of soybeans for human consumption remains relatively constant, servicing a small but important niche market sector of the industry. Usage of soybeans for human consumption was 27 000 tons in 2012, down from the 30 000 tons in the previous year. The unavailability of non GMO soybeans in South Africa has become a problem for some smaller niche market processors. This industry has potential for steady growth.

Full fat soya processing declined during 2012 due to decreased competitiveness against a high protein soybean meal. This decline was however marginal and the processed volume in 2012 of 145 000 tons, appears to be steady off take. Significant additional full fat soya processing capacity exists if required but price ratios of full fat soya to high pro soymeal and soya oil determine usage.

Soybean meal resulting from mechanical oil extraction of soybeans has grown establishing a niche market that competes with full fat soya. The balance between protein and energy makes it suitable for a range of diets as a soybean meal replacement. New plants have been established in South Africa, the advantage of these plants is that they are not capital intensive, the disadvantage is that their efficiencies are very low relative to solvent extracted plants. They could remain and play a role in the industry but this sector is not expected to grow significantly.

The largest sector for soybean consumption is that of solvent extracted soybean meal. This sector has increased dramatically. The crushing capacity for high protein soybean meal was 600 000 tons in 2012 will increase to 2 100 000 tons in 2014, an increase of 250%. Between 2012 and 2014 three new plants have been completed and the elaborate expansion of two further plants has taken place. Capacity that has been created is in the main of high standard with the ultimate objective of replacing Argentine soybean meal imports. To achieve this soybean meal will need to be properly de-hulled, of high protein content and achieve a level of consistency.

Quality of soybean meal is extremely important to the industry in order for it to fulfill the requirement of replacing imported Argentine soybean meal. The quality begins with the nutrient content and management of variation in the soybean, the effective de-hulling of the soybeans to reduce fibre levels and the correct heat application to destroy the maximum anti nutritive factors but not damaging protein quality. Near infra-red technology is being applied to establish a routine test to determine if overprocessing has taken place. The technology of measuring optimum heat treatment using a rapid assay is still required.

It is an exciting time in the soybean processing industry and it is unlikely that we will ever again see the industry expand the way it has in such a short period of time. We look forward to a significant portion of imported soybean meal being replaced by domestic high protein meal within a short period of time.

4.2.3.3

 

Other sources of protein


As mentioned earlier, sunflowers remained the main source of protein for animal consumption for many years. According to the AFMA Chairman's Report for 2012/2013, AFMA members used a total of 290 000 tonnes sunflower oilcake in 2012/2013 and the total quantity available in the market was 400 000 tonnes.

4.2.4

 

Consumers of protein


4.2.4.1

 

Animal feed manufacturers


A total of 1,877 million tonnes oilcake was available to the animal feed industry during the past year. Of the total, only 760 321 tonnes were produced locally, requiring imports of 1,117 350 tonnes. The importation of more than 728 000 tonnes soya oilcake is of particular interest in terms of the PRF campaign to promote soybeans. More information about this is available under various headings in this report.

The economic difficulties experienced by the developed world affected the less developed economies during 2012/13. The South African economy held up relatively well initially but the adverse global effects spilled over from developed and developing countries which had a direct impact on the South African livestock and animal feed industries.

South Africa in 2012 was ranked the 22 largest feed industry in the world at 11 million tons.

High feed raw material costs remained a challenge. The South African maize price remained stable between April 2012 and April 2013, decreasing only marginally from R2 235 to R2 155/ton while soybean meal prices increased significantly from R4 200 to R5 200/ton over the same time-period, after having peaked at R6 200/ton in September 2012.

Soya oilcake (including full fat soya) usage for AFMA members decreased from 1 008 760 tons in 2011/12 to 892 480 tons in 2012/13 a decline of 14.45%. This change was due mainly to a movement to fishmeal and other oilcakes. The feed industry utilized 728 150 tons of imported soybean oilcake over this period.

AFMA feed sales increased by only 0.5% between 2011/12 and 2012/13 to 6 176 151 tons mainly assisted by higher sales of pig feeds which typically move from home mixing to the formal feed industry during times of high raw material prices. In the poultry sector a drop of 1.6% and 4% in broilers and breeder feed reflects the current challenges faced by the poultry industry in the form of increased imported chicken meat and rising raw material cost.

National Feed sales for 2012/13 were calculated at 11,146 million tons which is an increase of 0.54% from the previous year. AFMA made up 59.77% of the national feed sales during this period.

Liaison with the registrar on changes in regulations under Act 36 of 1947 that will affect the feed industry received constant attention and is of paramount importance. The South African feed industry was well represented by AFMA in the International Feed Industry Federation (IFIF), enhanced by the hosting of the 4th Global Feed and Food Conference at Sun City.

The trading environment in which the feed industry finds itself remain extremely challenging.

4.2.4.2

 

Human consumption


According to SAGIS the 10-year average use of soybeans for human consumption is only 19 080 tonnes.

During the past three calendar years, the following quantities of soybeans were processed for human consumption (per calendar year) –

2010 22 200 tonnes
2011 21 700 tonnes
2012 21 100 tonnes

4.2.4.3

 

Other consumers


In the year under review both the pork and poultry Industries in South Africa continued the battle against high input costs and imports of relatively inexpensive products. Despite the fact that both industries are major employers in the farming sector, the government seems unwilling to intervene to alleviate the dire conditions that have developed.

The South African poultry industry, in 2012, experienced one of the most difficult years in its history. Frozen chicken products from Brazil and the EU, high feed prices due to the cost of maize and soybeans, the increases in fuel prices and labour costs caused a major crisis in the South African poultry industry. A dramatic oversupply in the local market resulting from the importation of chickens meant that many companies could not recover their production costs and a number of producers had to close their farms.

In 2012 feed usage was 4 097 000 tonnes at an average feed price increase of 30%. The broiler feed price averaged R4 355 per tonne. The broiler industry consumed approximately 3,57 million tonnes of feed, while the broiler chick producers consumed 521 000 tonnes of feed. In 2012 imports comprised 404 163 tonnes of poultry meat, representing an increase of 15,4% compared to 2011. Of the imports, 56,16% were from Brazil, while 34% were from the EU.

The broiler industry is presently negotiating with government authorities to increase poultry import tariffs.

The number of broilers slaughtered per week in 2012 was 18.79 million, 0,7% higher than in 2011. In 2012 per capita poultry meat consumption was 36,2 kg, 9,61 kg, beef 16,45 kg and pork 4,61 kg. Imported poultry meat represented 21,4% of the poultry consumed. The per capita con­sumption of eggs increased from 150 in 2011 to 156 in 2012 or 9.61 kg.

The pork industry suffered drastic retail price reductions, even as much as R4/kg, resulting in production costs that were between R1 and R1,50/kg higher than the pork price. The relatively low costs of imported chicken had a major impact on the pork industry because chicken is largely replacing pork in processed foods. The net effect is that many farmers are being forced out of the industry. Those that remain committed to the industry have recently been spending capital on mechanisation as a means of improving productivity and reducing labour costs, but these measures will have a high impact on future unemployment numbers.

Research in the pork industry was boosted over the past six years because research funds were made available through the statutory levy paid by pig producers. Six years ago there was virtually no research on pig farming in the country, but now the funds allocated for research are fully committed each year. The number of student bursaries and research projects increases continuously. Current research is creative and of great value to the pork industry. It is heartening to see how the interest in research into pig production has blossomed, merely because there are funds available to conduct research.

The situation in the poultry industry has not been as positive. In fact, the long anticipated source of research funding from SAPA's statutory levy is about to disappear before it had any impact on the research environment in South Africa. Apart from the establishment of a Chair in Poultry Health and Production at the University of Pretoria, the upgrading of facilities at that university for the Poultry Disease Management Agency (PDMA) and the relatively small amounts spent on capital items at some of the other universities in the country, there were no attempts to encourage research, boost postgraduate numbers or inspire undergraduate students to study poultry science. All such aspects would have been of great value to the poultry industry. Unfortunately it is highly unlikely that the industry will re-impose the statutory levy this year and that means that no new initiatives will be possible in future.

The poultry industry can ill afford to lose any initiative in this regard. The dire shortage of academics, researchers and postgraduate students interested in poultry science will have a severe impact on the industry in the years to come.

4.2.5

 

Projections 2015, 2020 and 2025


The main focus of the PRF is to produce more plant protein locally to replace imported oilcake as far as possible. Replacing imported oilcake with locally produced oilcake will lead to foreign exchange savings, promote employment opportunities, reduce risks for the animal feed industry and as a result, will improve food security. In its efforts to manage its research actions, the PRF must know the future demand for plant protein, specifically oilcake. This means that it is essential to prepare regular projections of the future demand for oilcake for animal consumption.

During the year under review projections were prepared to show the oilcake needs within the framework of four scenarios. These included high income growth, lower income growth, with import tariffs on livestock products held in place or with these tariffs phased out. Projections of the most probable scenario, a relatively higher income growth with tariffs being maintained were assumed. Given this scenario, the projections for oilcake demand in 2015 was 2 116 377 tonnes, 2 355 727 tonnes in 2020 and 2 632 604 tonnes in 2025. It is important to note that locally produced oilcake as a percentage of total consumption was an average of 37,3% for the four seasons from 2008/2009 to 2011/2012. It is an enormous deficit to fill.

There is progress with the production of local oilcake. The local production of oilcake in 2010/2011 was 624 912 tonnes and 766 927 tonnes in 2011/2012. According to expectations it will be 918 180 tonnes in 2012/2013. This increase in locally produced oilcake may be ascribed mainly to the growth in the soybean industry. Hectares planted under soya increased from 237 750 ha in 2008/2009 to 516 500 ha in 2012/2013, while yield increased from 516 000 to an expected 851 000 tonnes for the same period. The PRF has set a target, in terms of soya of one million tonnes to be produced by 2015 (500 000 ha at two tonnes/ha) and 2,5 million tonnes by 2020 (one million ha at 2,5 tonnes per ha). It seems as if the 2015 targeted yield will be reached earlier than expected. The target of 500 000 hectares has already been exceeded.

Local soya oilcake, as a proportion of the total oilcake consumption in South Africa, has increased over time. Currently it comprises 69% of total oilcake consumption. If it is assumed that this will increase to 75% of oilcake consumption in 2015, it implies a demand for 1 587 282 tonnes soya oilcake in 2015. The demand for soya oilcake in 2020 and 2025 respectively will be 1 766 795 and 1 974 453 tonnes. Translated into whole soybeans, it means a demand for 1 984 103 tonnes in 2015, with a corresponding demand for 2 208 494 and 2 468 066 tonnes soya in 2020 and 2025 respectively. These figures do not include soybeans for human consumption and exports.