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trade agricultural raw materials livestock industry south africa

The Trade in Agricultural Raw Materials and Livestock Industry in South Africa 2022

Stephen Timm | South Africa | 31 March 2022

The Trade in Agricultural Raw Materials and Livestock Industry in South Africa 2019

Marc Bosman | South Africa | 17 December 2019

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Report Coverage

This report deals with the wholesale trade in agricultural raw materials and livestock, which represent essential building blocks for most human and animal food, and human beverages. It contains comprehensive information on trade in major agricultural commodities and various livestock breeds, notable international and local players, corporate actions and developments. There are profiles of 29 companies including multinationals such as Bayer, notable local agri companies such as NWK, Kaap Agri, Senwes and VKB, fishing companies including Premier Fishing and Oceana, seed companies Pannar Seed and Sakata Seed and flower wholesaler Multiflora.

Introduction

This report deals with the wholesale trade in agricultural raw materials and livestock (the commodities), which represent essential building blocks for most human and animal food, and human beverages. On the back of an 8.3% growth in income in the agricultural sector, following favourable weather and record crop production, wholesale trade in agricultural raw materials and livestock grew 18.5% to R201.6bn in 2021, faster than the 13.2% growth to R170bn in 2020. South Africa recorded a trade surplus of US$1bn in Q4 2021, up 36% year on year, with a record US$12.4bn in exports of agricultural products, food and beverages in 2021, up from US$10.2bn in 2020. Experts forecast income will decline slightly in 2022, largely due to excessive rain at the end of 2021. Producers are under pressure from significant price increases in inputs such as fertiliser and fuel, compounded by supply challenges caused by the Russia-Ukraine war. Other major challenges that affect agricultural sales include lack of traceability, lack of market access to key export markets, poor logistics and ailing municipal services. To gain a more complete perspective of the individual commodity value chains and their impact, this report should be read in conjunction with the relevant Who Owns Whom agricultural industry downstream sector reports.

Strengths

• Funding is available for small-scale farmers.
• The industry contributes to the economy, supporting food security and job creation.
• The industry is well-established, providing a solid platform for rural development and transformation.
• The sector is export-driven as about half of revenue is generated from exports.

Weaknesses

• Highly concentrated commercial sector.
• Local prices are usually set outside of South Africa.
• R&D, which is expensive, is required to improve production systems and feed conversion ratios.
• Shortage of skilled and experienced personnel.
• Slow pace of transformation in the sector.
• Structural industry issues.
• The industry is very capital-intensive.

Opportunities

• Animal feed, if more meat is produced locally.
• Current high prices, particularly for grains and oil-seeds, offer producers good revenue.
• Given the quality of South African red meat, including beef and lamb, exports can be ramped up.
• South African citrus and certain other fruit exports have grown in recent years.
• Soya beans, which recently saw a record increase in production, have gained share in animal feed.
• The cannabis industry, and ongoing moves to support it from government, represents an opportunity for producers and traders.
• The poultry sector is looking more promising given recent investments in local poultry and tariff measures to curb imports combined with rising consumer demand.

Threats

• Animal diseases and pests.
• Climate change, which threatens to increase the risk of pests and lower crop yields and animal production.
• Competition from other countries which receive significant incentives and subsidies has led to the sugar industry struggling to grow exports.
• Lack of market access for key exports through trade agreements and protocols and strict phytosanitary measures.
• Logistics challenges, including inefficiencies at ports, poor roads and an ailing rail system.
• Rising cost of inputs and production.
• The sugar tax is a threat to the sugar industry’s survival.
• The Ukraine-Russia war which threatens to lead to supply disruptions for grains and fertiliser, and may further drive up commodity prices.

Outlook

Despite rising prices of farm inputs, shipping disruptions with the Russia-Ukraine war and excessive rainfall at the end of 2021, industry players were cautiously optimistic about 2022, following the record year in agricultural production and exports in 2021. This could change if the geopolitical fallout of the war worsens. The Bureau for Food and Agricultural Policy, however, expects the agricultural sector to shrink by 7% in 2022, in sharp contrast to the past two years of growth. It warns that the longer-term outlook is one of stagnation and decline — unless South Africa improves its competitiveness in areas such as logistics and market access pretty soon. In contrast, Wandile Sihlobo, chief economist at the Agricultural Business Chamber, expects only a small contraction of 1% or 2% in agricultural production in 2022, partly because of a slightly smaller grain harvest.

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The Trade in Agricultural Raw Materials and Livestock Industry in South Africa
The Trade in Agricultural Raw Materials and Livestock Industry in South Africa 2022

Full Report

R 6 500.00(ZAR) estimated $352.07 (USD)*

Industry Landscape

R 4 550.00(ZAR) estimated $ 246.45 (USD)*

Historical Reports

The Trade in Agricultural Raw Materials and Livestock Industry in South Africa 2019-12-17

R 1 900.00(ZAR) estimated $102.91 (USD)*

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Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 3
2.2. Geographic Position 4
2.3. Size of The Industry 5
2.4. Key Success Factors and Pain Points 19
3. LOCAL 20
3.1. Key Trends 20
3.2. Notable Players 23
3.3. Trade 25
3.4. Corporate Actions 32
3.5. Regulations 33
3.6. Enterprise Development and Social Economic Development 36
4. AFRICA 38
5. INTERNATIONAL 41
6. INFLUENCING FACTORS 43
6.1. COVID -19 43
6.2. Economic Environment 44
6.3. Labour 45
6.4. Environmental Issues 48
6.5. Technology, Research and Development (R&D) and Innovation 49
6.6. Government Intervention 50
6.7. Input Costs 51
6.8. Traceability 53
7. COMPETITIVE ENVIRONMENT 54
7.1. Competition 54
7.2. Ownership Structure of the Industry 55
7.3. Barriers to Entry 57
8. SWOT ANALYSIS 58
9. OUTLOOK 59
10. INDUSTRY ASSOCIATIONS 59
11. REFERENCES 60
11.1. Publications 60
11.2. Websites 61
APPENDIX 1 66
Summary of Notable Players 66
COMPANY PROFILES 73
AFG Worldwide (Pty) Ltd 73
AFGRI Agri Services (Pty) Ltd 75
Bayer (Pty) Ltd 79
BKB Ltd 82
Brisen Commodities (Pty) Ltd 86
Bunge ZA (Pty) Ltd 88
Capekaroo International (Pty) Ltd 90
Capstone Seeds South Africa (Pty) Ltd 93
COFCO International South Africa (Pty) Ltd 95
Hochfeld Grains (Pty) Ltd 97
Humansdorpse Kooperasie Beperk Primary Co-Operative (Die) 99
Kaap Agri Bedryf Ltd 102
Klein Karoo (Pty) Ltd 105
Louis Dreyfus Company Africa (Pty) Ltd 108
Multiflora (Pty) Ltd 110
NWK Ltd 112
Obaro Handel (Pty) Ltd 116
Oceana Group Ltd 119
Olam South Africa (Pty) Ltd 125
Pannar Seed (Pty) Ltd 127
Premier Fishing SA (Pty) Ltd 129
Rijk Zwaan South Africa (Pty) Ltd 133
Sakata Seed Southern Africa (Pty) Ltd 134
Selemo Valley Farms (Pty) Ltd 136
Senwes Ltd 138
Stucken and Company (Pty) Ltd 156
Syngenta South Africa (Pty) Ltd 158
Universal Leaf South Africa (Pty) Ltd 161
VKB Beleggings (Pty) Ltd 162

Introduction

This report deals with the wholesale trade in agricultural raw materials and livestock (the commodities), which represent essential building blocks for most human and animal food, and human beverages. The Food and Agriculture Organization (FAO) of the United Nations (UN) reports that the global agricultural sectors, which include food, vegetable and animal products, oils and fats, and tobacco and beverages accounted for more than US$1.6-trillion of trade flow in 2017, which is less than 10% of international trade. Bi-lateral trade between the United States (US), China, the European Union (EU), Canada, Mexico, Japan and Brazil accounted for US$588bn of the 2017 total. The limited scope of this report is unable to do justice to this industry, which due to the number of segments and its ongoing evolution includes multiple entire agrifood value chains, from seed to distribution. To gain a more complete perspective of the individual commodity value chains and their impact, this report should be read in conjunction with the relevant Who Owns Whom agricultural industry downstream sector reports.

Strengths

• Availability of a wide range of new developments in security technologies.
• Provides a service not readily available from a police force restricted by financial constraints and limited resources.
• Provides employment for entry level workers.
• Security companies provide a security service that allows business customers to focus on their core business operations.
• Security services and highly visible security officers provide a valuable resource in crime prevention.
• Services are available on a stand-alone or integrated basis relevant to the level of security required.

Weaknesses

• Blurring of lines between state law enforcement and private protection with the private security industry unlawfully infringing on the rights of ordinary members of the public.
• Failure by Psira to pursue action against security personnel who break the law.
• Flooding of the market with cheap imported equipment and technology provides unfair competition and increased risk of inferior services.
• Negative perception of the industry in the eyes of the public and government.
• Non-compliance by some operators with Psira registration and other legal requirements.

Opportunities

• High levels of crime and violence, although not good for the country, provide opportunities for growth.
• The implementation of the government’s infrastructure programme will increase demand for security services at construction sites and for the new facilities on completion.
• The promotion of crime prevention policing partnerships with Saps.

Threats

• Foreign ownership restrictions of the proposed Private Security Industry Regulations Amendment Bill.
• High unemployment and high household expenses reduce disposable income available for the purchase of home security systems.
• Negative effect of the volatile rand on the price of imported vehicles and security technologies.
• Poor economic growth reduces profit margins, making sophisticated corporate security systems less affordable.
• Potential job losses due to the introduction of electronic security systems.
• Reduced demand resulting from the insourcing of security guards.
• Spike in security guard killings with 16 guards murdered on duty since January 2019.
• Unfair advantage of non-compliant service providers who undercut registered companies when bidding for contracts.

Outlook

Industry players note that grain supply will be lower in 2019 due to drought, high temperatures and planting uncertainty, reduced profit and political uncertainty. Consumers will be under increasing pressure. Lower disposable income is evident in retail sector results generally and in the food sector specifically, and reflect reduced volume, price and margin. Industry players are focused on finding a balance in their asset portfolios across value chains in order to weather global developments and increase profitability through cost and capital efficiency, and increase and find new income through differentiated products and services. This will be achieved through partnerships and investments. Further contraction and concentration is inevitable as the larger value chain participants squeeze out, absorb or align with successful smaller players. The Financial Times said: “For those companies that are able to identify the powerful forces shaping supply and demand for raw materials and foodstuffs - huge opportunities lie ahead”.

The Trade in Agricultural Raw Materials and Livestock Industry in South Africa
The Trade in Agricultural Raw Materials and Livestock Industry in South Africa 2019

Full Report

R 1 900.00(ZAR) estimated $102.91 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 72.04 (USD)*

Historical Reports

The Trade in Agricultural Raw Materials and Livestock Industry in South Africa 2022-03-31

R 6 500.00(ZAR) estimated $352.07 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 5
2.2. Geographic Position 9
3. SIZE OF THE INDUSTRY 11
4. STATE OF THE INDUSTRY 25
4.1. Local 25
4.1.1. Corporate Actions and Industry Developments 31
4.1.2. Regulations 35
4.1.3. Enterprise Development and Social Economic Development 39
4.2. Continental 41
4.3. International 44
5. INFLUENCING FACTORS 45
5.1. Government Intervention 45
5.2. Economic Environment 46
5.3. Traceability, Transparency and Sustainability 49
5.4. Risk management 50
5.5. Trade 52
5.6. Input and Operating Costs 54
5.7. Labour 55
5.8. Technology, Research and Development (R&D) and Innovation 58
5.9. Cyclicality 61
5.10. Environmental Concerns 62
6. COMPETITION 64
6.1. Barriers to Entry and Moving up the Value Chain 67
7. SWOT ANALYSIS 67
8. OUTLOOK 68
9. INDUSTRY ASSOCIATIONS 69
10. REFERENCES 70
10.1. Publications 70
10.2. Websites 72
APPENDIX 1 77
Summary of Notable Players 77
APPENDIX 2 82
Seed and Crop Protection Industry Consolidation 82
COMPANY PROFILES 83
AFG WORLDWIDE (PTY) LTD 83
AFGRI OPERATIONS (PTY) LTD 84
BAYER (PTY) LTD 88
BKB LTD 91
BRISEN COMMODITIES (PTY) LTD 95
BUNGE ZA (PTY) LTD 97
CAPEKAROO INTERNATIONAL (PTY) LTD 99
CAPSTONE SEEDS SOUTH AFRICA (PTY) LTD 102
COFCO INTERNATIONAL SOUTH AFRICA (PTY) LTD 104
FLAMINGO HORTICULTURE SOUTH AFRICA (PTY) LTD 106
HOCHFELD GRAINS (PTY) LTD 107
HUMANSDORPSE KOOPERASIE BEPERK PRIMARY CO-OPERATIVE (DIE) 109
KAAP AGRI BEDRYF LTD 111
KLEIN KAROO (PTY) LTD 114
LOUIS DREYFUS COMPANY AFRICA (PTY) LTD 117
MONSANTO SOUTH AFRICA (PTY) LTD 119
MULTIFLORA (PTY) LTD 122
NWK LTD 123
OBARO HANDEL (PTY) LTD 127
OCEANA GROUP LTD 129
OLAM SOUTH AFRICA (PTY) LTD 134
PANNAR SEED (PTY) LTD 136
PIONEER FISHING (PTY) LTD 138
PREMIER FISHING SA (PTY) LTD 141
RIJK ZWAAN SOUTH AFRICA (PTY) LTD 144
SAKATA SEED SOUTHERN AFRICA (PTY) LTD 145
SENWES LTD 147
STUCKEN AND COMPANY (PTY) LTD 158
SUIDWES BELEGGINGS (PTY) LTD 160
SYNGENTA SOUTH AFRICA (PTY) LTD 162
TRADEVANTAGE GRAIN (PTY) LTD 165
UNIVERSAL LEAF SOUTH AFRICA (PTY) LTD 167
VKB BELEGGINGS (PTY) LTD 169