fbpx

South African pig producers power through energy crisis

10-04-2023 | |
South African pig producers
To maintain top class production, pig farms in South Africa always have at least one back up power source. Photo: Photo: Sappo

South African pig producers are not only facing a sharp rise in input costs but their access to electricity from the national power grid is disconnected for anywhere between 2 to 10 hours a day, every day. With these challenges, how has the industry maintained world-class standards and kept ASF and PRRS out of a commercial herd of over 120,000 sows?

South Africa makes up only about 0.2% of the world’s pork production, says Johann Kotzé. As CEO of the South African Pork Producers’ Organisation (Sappo), he explains that this would satisfy demand across China for just 1.5 days. Nevertheless, the fully integrated sector has a world-class formal sector which, in 2022, consisted of approximately 520 producers – 38 of which housed over 1,000 sows – slaughtering 3.8 million pigs at about 150 pork abattoirs across the country.

A historic low for the pork sector

According to Kotzé, while the pork sector grew organically by 6.5% last year, 2022 was 1 of the worst years in its history. It saw the commercial sow herd drop by about 15-20%. Pig farmers were unable to keep their operations profitable as a result of rising input costs and low farm-gate prices. “Between 2015 to 2022, the average market price of pork increased by 10%, but in real terms, it decreased by 24%. This highlights the all-time-low in profitability that pig producers experienced in 2022.”

An energy crisis of their own – loadshedding

“No industry remains unaffected by high input costs”, says Kotzé. “We do not view ourselves as special due to the fact that our country sees agriculture as an essential service, but rather know that we play an important role in a greater community.” He adds that by having this mindset, the industry has been able to become self-sufficient, to a certain extent. It is less reliant on the government, including Eskom, South Africa’s electricity public utility.

That is critical for the survival of any pig farm in South Africa because of “loadshedding”. This is a typical South African phenomenon in which electricity is being switched off temporarily on purpose as power supplies simply are insufficient. It has been a recurring phenomenon in South Africa since 2007.

Until last year, it was intermittent, with long periods of sustained power between periods of cuts. However, in the second half of 2022, the frequency of power cuts rose to unprecedented levels, with more than 200 days of national power cuts experienced throughout the year. Loadshedding occurred every day in January 2023, averaging about 6 hours a day without power, with no respite in sight.

The price of not having electricity, even for an hour, is too high, so such a situation must be avoided

Johann Kotzé, CEO of the South African Pork Producers’ Organisation (Sappo)

Gearing up for self-sufficiency

All artificially ventilated local pig farmers have a back-up electricity system that will alert the farmer should the system not activate automatically and immediately. The highly sophisticated pig producing farms always have at least 1 alternative energy source, typically a standby generator that runs on diesel. This is very expensive, but, as Kotzé points out, “The price of not having electricity, even for an hour, is too high, so farmers should avoid such a situation.” That makes production costs higher, and as Kotzé cautions, the higher prices for the whole value chain are imminent.

In South Africa, solar power is also fairly common on farms, and biogas is also increasingly used, which Kotzé believes has huge potential for growth.

Abattoirs do double shifts

While pig farms have back-up power sources that can meet the demand of the farm, the country’s abattoirs require far more electricity. The electricity that these facilities require to run is far higher than what they can afford or produce themselves. They are battling the most, says Kotzé, and cannot manage the investment outlay for such a system. As a result, the abattoirs do double shifts when the power is on.

A movement at the end market

Loadshedding affects all South Africans, including the end users and the electricity they have to power the fridges and freezers in their homes. With the majority of consumers in South Africa having to make do with a relatively low income, the first result of the power cuts was an increase in demand for smaller portion sizes. “Consumers had to adjust to the lack of energy in South Africa, and so we saw the market evolve, and the needs change. So, consumers who previously bought 2kg of pork now buy only 500g.”

Kotzé also makes a very interesting point about how the landscape is changing to satisfy a market that wants to eat pork but cannot keep the meat cool: canned meat. He says the trend has already started, and this segment will inevitably expand to keep up with new consumer behaviours and trends.

You need to think like a virus because then its movement becomes more predictable

ASF is “uncontrollable but manageable”

Apart from loadshedding, also African Swine Fever (ASF) continues to be a challenge for South Africa’s swine industry. The first case of ASF occurred there in 1925. The virus resurfaced in 2012. Authorities created a “red line zone”, and the virus remained in it. Today, however, the virus roams in all of the county’s 9 provinces in the informal sector. While it remains in the informal sector, the 4 outbreaks of ASF in the formal sector in the last 3 years were immediately eradicated.

“South Africa has one of the healthiest [commercially farmed] pig herds in the world,” says Kotzé. How is it possible for the country’s formal herd to maintain its health status, bearing in mind that for every pig in a commercial pig farm, there is a pig in the informal sector, in addition to the wildlife spread throughout the country?

Think like a virus

“You need to think like a virus because then its movement becomes more predictable,” says Kotzé, adding, “There is a methodology that we apply to safeguard our farms. We compartmentalise ourselves and are under permanent lockdown. We strictly control the movement of people coming onto our farms, viewing and treating everything outside a farm as infected. Rituals are followed precisely – not even food is allowed into our high-health farms but is provided and prepared inside.”

Biosecurity is something each farm lives by. To further mitigate risk, farms are not congregated in a specific area or province but are spread throughout the country and are generally far from one another.

Overall, the industry remains confident about its future. Looking to the year ahead, the objective, says Kotzé, is to grow its market share by increasing the perceived value of pork, heightening reach in non-traditional pork audiences, and boosting production sustainability. An extensive marketing campaign at the end of 2022 has already improved sales at targeted stores of as much as 40% month-on-month. Furthermore, Sappo intends to keep its herd free of ASF and PRRS by continually improving biosecurity and monitoring border control.

Join 18,000+ subscribers

Subscribe to our newsletter to stay updated about all the need-to-know content in the pigsector, three times a week.
Kinsley
Natalie Kinsley Freelance journalist




Beheer