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Price formation and competitiveness of the South African broiler industry in the global context

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  • T. Davids
  • F.H. Meyer

Abstract

In light of its recent classification by the Department of Trade and Industry as an industry in distress, this paper undertakes a comprehensive evaluation of the competitiveness of South African broiler production in the global context. A qualitative review of industry structure revealed a great deal of similarity to market leaders globally. Price formation within broiler production contracts in South Africa utilizes the same tournament pricing used successfully in the USA, resulting in high levels of technical efficiency, however economic efficiency is lacking. Univariate time series analysis confirmed that the domestic price of chicken is more elastic to changes in the import parity price than changes in feed costs. Feed remains crucial to economic efficiency and while declining protein meal prices in the future is plausible given recent investment into the industry, marketing strategies that optimize the returns from an entire carcass could aid effective competition with imported products.

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  • T. Davids & F.H. Meyer, 2017. "Price formation and competitiveness of the South African broiler industry in the global context," Agrekon, Taylor & Francis Journals, vol. 56(2), pages 123-138, April.
    • Handle: RePEc:taf:ragrxx:v:56:y:2017:i:2:p:123-138
    DOI: 10.1080/03031853.2017.1302349
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    References listed on IDEAS

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    1. Rachael E. Goodhue, 2000. "Broiler Production Contracts as a Multi-Agent Problem: Common Risk, Incentives and Heterogeneity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 606-622.
    2. Porametr Leegomonchai & Tomislav Vukina, 2005. "Dynamic Incentives and Agent Discrimination in Broiler Production Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(4), pages 849-877, December.
    3. P. Davids & F.H. Meyer & M. Louw, 2015. "Evaluating the effect of proposed tariff protection for the South African broiler industry," Agrekon, Taylor & Francis Journals, vol. 54(1), pages 70-95, March.
    4. Baquedano, Felix G. & Liefert, William M., 2014. "Market integration and price transmission in consumer markets of developing countries," Food Policy, Elsevier, vol. 44(C), pages 103-114.
    5. Theofanis Tsoulouhas & Tomislav Vukina, 2001. "Regulating Broiler Contracts: Tournaments Versus Fixed Performance Standards," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 1062-1073.
    6. Tomislav Vukina & Porametr Leegomonchai, 2006. "Oligopsony Power, Asset Specificity, and Hold-Up: Evidence from the Broiler Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 589-605.
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    Cited by:

    1. Chimaliro, Aubrey Victor, 2018. "Analysis of main determinants of soya bean price volatility in Malawi," Research Theses 334743, Collaborative Masters Program in Agricultural and Applied Economics.
    2. Kgothatso Nkgadima & Chiedza L. Muchopa, 2022. "Do Import Tariff Adjustments Bolster Domestic Production? Analysis of the South African-Brazilian Poultry Market Case," Economies, MDPI, vol. 10(12), pages 1-17, December.
    3. Donna Hornby & Adrian Nel & Samuel Chademana & Nompilo Khanyile, 2018. "A Slipping Hold? Farm Dweller Precarity in South Africa’s Changing Agrarian Economy and Climate," Land, MDPI, vol. 7(2), pages 1-25, March.
    4. Omid Zamani & Craig Chibanda & Janine Pelikan, 2023. "Unraveling the effects of import bans on domestic poultry production: a case study of Senegal," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 11(1), pages 1-25, December.

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