An interesting and well written article which features our very own Dargle produce – Chris and Kandi Slater’s delicious, award winning chicken. Written by Karen Zunckel for Verdant Life.
Small-scale agriculture or family farming is increasingly being seen as a more attractive and sustainable alternative to factory farming or more broadly, industrial agriculture that is prevalent in primarily first world countries.
A change in mind set is encouraged whereby the agriculture industry acknowledges its dependence on a finite natural resource base – including the finite quality of fossil fuel energy that is now a critical component of conventional farming systems. The advantages of family farming production methods far outweigh the industrial alternatives for a few of the following reasons:
- Foods are produced without the use of pesticides, hormones, antibiotics, and other hazardous inputs and are therefore more healthy for the consumer.
- Sustainable farms help preserve genetic diversity by raising a wide range of animal breeds. Many of these breeds are chosen due to the geographic areas in which they are raised, thus maintaining genetic diversity of breeds which are more resilient to disease.
- Intensive livestock production contributes 80% of agriculture’s greenhouse gas emissions.
- Small-scale farms have a lower carbon footprint on their transportation as they sell their product locally through farmer’s markets, local stores, a marketing network or small outlets.
- Sustainably-raised animals are treated humanely and are permitted to carry out natural behaviours such as rooting in the dirt and pecking the ground.
- Sustainable farms support local economies by purchasing supplies and materials from local businesses.
- Sustainable farm owners provide a safe working environment and pay their workers a fair wage.
- In conventional farming, due to modern selective breeding, laying hen strains differ from meat production strains. As male birds of the laying strain do not lay eggs and are not suitable for meat production, they often succumb to the most horrendous deaths by cervical dislocation, asphyxiation by carbon dioxide and maceration using a high speed grinder.
Apart from the ruin of our natural resources, there is an equally dark side to the industrialised agriculture system, one which is matched every bit by putting the pinch on rural families and futures, where every day small-scale farmers suffer rude awakenings and big agribusinesses squeeze them into more financial difficulties while reaping huge profits.
One would think that the lower capital costs necessary for a free-range poultry system, together with the high premium paid for free-range broiler meat, may give admirable results in the economic feasibility of a small-scale broiler farm. Added to this is the fact that South Africans’ appetite for chicken is at an all-time high. The poultry industry is the largest individual agricultural sector in South Africa, contributing some 22% of the total agriculture gross value in 2012 and almost 47% of animal product gross value. It provides direct employment for over 56 000 people and indirect employment to almost 108 000 people, is the largest consumer of maize, and supports many peripheral businesses as well as those downstream in the value chain. The country’s poultry industry is today worth more than R27 billion a year, and continues to grow rapidly. More than one billion broilers are slaughtered per year and average per capita consumption of chicken meat is currently more than 33kg. Although at first glance the industry might seem to be dominated by large-scale producers, as many as 25% of all broiler chickens supplied to the market are produced by small- and medium-scale growers. This means that these suppliers have a market share currently worth more than R6 billion a year.
So it was intriguing to read the email from Croft Farm Chickens on the 3rd January 2014 saying:
Having had a few days off we have taken a look back at the last year and realised that it has been a tough one all round. For us it has been fraught with ever increasing input costs (feed, wages, petrol) and while we have tried to weather these as best we can, it has taken its toll. We are ruled by feed costs (being 75% of total costs) and while maize has actually come down this year, unfortunately the feed companies have not followed suit and we have just been informed of yet another feed increase!
We decided to investigate further.
Both the broiler and egg industries have been under severe pressure and negatively impacted on a number of fronts. Most significantly, these include the flood of imports of frozen poultry meat into South Africa, unprecedented grain cost increases due to the drought in the USA and subsequent higher feed prices worldwide, energy cost increases, and a change in consumer behaviour and spending, which created supply and demand imbalances and a market characterised by oversupply in the final product. Operating cost increases and improved efficiencies could not protect margins in this constrained environment.
Supply and Demand
About half of South Africa’s maize is used for animal feed, and about 70% of the feed is used for poultry. While annual national maize production in South Africa fluctuates widely according to rainfall, average production has remained constant over time. This is a concern, as consumption has increased with the growing population and maize production may soon not meet local demand, affecting both local and regional supply.
South Africans have already shown interesting changes in food consumption since the 1970s. They have shown a decrease in the consumption of the staples, maize and bread, and have massively increased their annual consumption of chicken from 6 kg to 33 kg per person and chicken exceeds the total consumption of red meat; a trend that is likely to continue. With local poultry production increasing significantly over the last 20 years, producers have been unable to meet the massive increase in local demand for white meat, and chicken is now one of South Africa’s largest agricultural imports.
The producer price indices for maize, fertilizer, fuel, animal health and crop protection, maintenance and repairs and animal feed prices have increased dramatically since 2002. Add to this their dependence on external factors that the farmer cannot control; retail prices of these commodities are linked to the oil price and to the rand/dollar exchange rate. Currently, farm feeds are the biggest expenditure item (75% in the case of Croft), followed by fuel and fertilisers.
The indirect impact of rising food prices on small businesses comes via the reduction in the disposable income of the business owner and in many cases, their input costs grow faster than their revenues. Most small businesses finance their expansion and cash flow requirements from their own savings, and are unable to source other types of soft finance from institutions like the Land Bank. They face a situation where government support was phased out at the same time as the markets opened up to allow competition from cheaper imports. Therefore, a reduction in disposable income translates into less money being available for investing in the business or helping to ride out adverse business periods.
The minimum wage for farm workers was raised by 50% to R105 on 1 March 2013. The research shows that if wages were to rise any higher than R105 a day, many farms would be unable to cover their operating expenses and this would precipitate a huge restructuring of agriculture. Despite this, a further daily minimum wage increase, by 6,4% from R105 to R111,72 for a nine-hour workday, will come into effect on 1 March 2014 which is unaffordable to many small and medium businesses and many job losses are expected. Diesel is expected to have reached R16/litre by the middle of 2014.
This makes small businesses relatively more vulnerable than other types of businesses to diverse price changes so only the biggest survive.