By: Izaak Breitenbach, CEO, SA Poultry Association Broiler Organisation
South Africa’s poultry sector is a vital engine of jobs, rural livelihoods and food security.
It contributes an outsized share of agricultural output and supports more than 134,000 people across the value chain. So, when the Competition Commission’s market inquiry questions the structure of the poultry industry (particularly the role of large, vertically integrated producers as the alleged gatekeepers of genetics, feed and day-old chicks), the debate should be rooted in facts, not ideology.
First, consider the benefits to this model that the inquiry can’t ignore: Integrated players subsidise poultry sector public goods, from the biosecurity training for smallholders to capital-intensive national cold-chain and processing capacity, which would simply not be feasible if these operations were fragmented across hundreds of small operators.
During the last bird flu crisis, large integrators absorbed the upfront costs of contingency measures (importing hatching eggs, securing parent stock and supporting contract growers) that prevented a broader food-security emergency. The poultry industry’s rapid responses preserved supply and employment, when government support was offered to importers instead.
Large-scale, vertically integrated poultry production is not a South African idiosyncrasy – it is the most widely implemented organisation structure in the global poultry industry. Size and scale are what enable the production of affordable protein around the world. It is the large integrated producers who ensure that smaller producers can access affordable, high-quality day-old chicks. The Commission’s concern that integrated players allegedly gatekeep inputs is misplaced. Integrated firms largely supply critical inputs to contract growers, and it is they who carry the investment risk, maintain standards, and ensure that the distribution networks work.
Contract growing is a pathway to participation; growers receive day-old chicks, feed, veterinary guidance and guaranteed offtake, while the bigger company assumes the bulk of the market and biological risk. Far from locking out independent entrants, these arrangements lower barriers to entry by removing the need for small farmers to finance hatcheries, feed mills or expensive cold chain infrastructure before they can farm or potentially accessing prohibitively expensive services that are not part of an integrated chain.
That is not to say the Commission has nothing to do! Transparency and safeguards are necessary. SAPA has documented how contract terms deliver steady incomes, access to finance and opportunities for growers to scale into new value-chain roles; the inquiry should use that positive evidence as the basis for its findings and recommendations.
More importantly, the inquiry shouldn’t lose sight of the larger threats that actually constrain competition: dumped imports, excessive feed costs driven by global commodity markets, chronic load-shedding, failing logistics and the cost of disease outbreaks.
These external pressures compress margins and shrink the pool of viable independent entrants far more than integration ever has. The Commission should surely prioritise tackling these root causes, like tightening trade defense, fixing infrastructure, and ensuring disease-control compensation (or more accessible vaccination!), rather than penalising the institutions that keep the sector viable.
If the Commission wants to promote transformation and broaden participation, it should partner with the poultry industry to mobilise blended finance schemes, scale up independent hatchery capacity where feasible, and design smart incentives that encourage integrators to expand supplier and owner-operator pathways. SAPA’s poultry master plan commitments and recent private investments show how public policy aligned with industry action can deliver jobs and inclusion.
South Africa does not need a punitive inquiry that substitutes theory for the operational realities of poultry production. What it needs is a targeted, evidence-based process that protects consumers from unfair imports, holds commercial players to transparent standards, and supports investment, transformation, and rural employment.
This balanced approach will strengthen competition not by breaking scale, but by ensuring scale works better for South Africa’s economy and its people.
Photo by Henrique S. Ruzzon on Unsplash
