Barriers to entry and inclusive growth: The case of the South African Poultry industry
Mr Zengeni, Tatenda
Abstract
The poultry value chain is an important part of the agricultural sector in South Africa. In
2014, broiler production accounted for almost 15% of all agricultural production and 33% of
all animal products produced in South Africa. Further, the poultry industry provides 65% of
all animal protein consumed in South Africa. Given the importance of the poultry sector in
the South African economy, it is important to understand the factors that can negatively
affect growth, efficiency, and rivalry within the sector. This raises the question of how easy
or difficult entry into the sector may be, and whether growth has been inclusive. There are
many reasons why these questions are important; firstly, the industry is characterized by
few big producers; secondly, the sector has been plagued by anti-competitive conduct in the
past, and finally, there has recently been a number of examples of exit, entry, and corporate
restructuring in the sector. Thus, despite the existence of a few large vertically integrated
incumbents, there has been successful entry of small players. This paper assesses these
dynamics and identifies barriers to entry at each level of the poultry value chain. It further
uses a case study of entry by a small producer to analyse how barriers to entry have been
overcome and key attributes of a successful poultry industry through the Brazil case study.
The study provides recommendations on reducing barriers to entry and facilitating inclusive
growth in the poultry industry drawing from these findings. It concludes by proposing key
elements for developing a poultry strategy for South Africa.
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