Industry Trend Analysis - EU Chicken To Push South Africa Further Into Deficit - SEPT 2017

BMI View : South Africa has been posting increasing trade deficits over the past decade, and we forecast this deficit to widen up to 2021 as consumption grows and imported poultry continues to undercut local producers. The government will attempt to protect domestic producers through import restrictions, but these efforts will be undermined by other challenges facing the industry, including stricter domestic regulations and the recent outbreak of Avian Influenza.

South Africa will continue to post deficits in poultry, as consumption increases and imports flood the market. We forecast South Africa's poultry deficit to deepen by almost 100,000 tonnes over our forecast period, reaching 582,900 tonnes in 2021. This trend will be driven by strong growth in domestic consumption, on the one hand, and a series of obstacles to increased domestic production on the other.

Consumers will increasingly turn to chicken, as cultural preferences coincide with financial pressure on households. The 'meatification' of diets is well underway in South Africa, and poultry is a favourite among local consumers. Poultry will benefit even further from the country's weakening economic outlook, as consumers switch away from beef and opt for cheaper options like chicken. We are forecasting consumption growth of 5.9% in 2017, and an average growth rate of 3.1% out to 2021, which would cement the country's status as the region's largest consumer of poultry (in volume terms). This positive outlook is confirmed by our Food & Drink team's outlook on poultry sales (in ZAR terms), which are forecast to grow by an average of 8.2% from 2018 to 2021.

Increasing Reliance On Imported Poultry
South Africa - Poultry Production Balance ('000 tonnes)
Sources: USDA, BMI

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