Key insights into the African pork market
Issued by IndexBox - Sep 26th 2018, 08:58
According to the report "Africa: Pork (Meat Of Swine) - Market Report. Analysis And Forecast To 2025", recently published by IndexBox, in 2017 the pork market in Africa expanded to 1.6M tonnes, maintaining a steady upward trend over the last ten year period.
From 2007 to 2017, pork consumption rose with a CAGR of +3.7% per year. The rapid rise in Africa’s population and the accompanying increase in demand for food are both set to be key impetus factors in driving pork consumption. Other factors, such as the pace of economic growth in the region, household income, pork prices and consumer preferences for other types of meat, as well as religious beliefs and environmental conditions, will also continue to impact the consumption of pork and meat consumption.
In wholesale prices, the market value totalled $3.2B in 2017, an increase of $0.4B (or 15%) against the previous year and $1.0B (or 23%) less than the highest market figure observed in 2012 (IndexBox estimates). The market value has experienced significant fluctuations over the past decade, due to changes in pork producer prices. These, in turn, largely depend on the prices for swine feed – approx. 70 percent of the total cost of pig production is made up by the cost of feed, mainly corn and soybean.
Nigeria, South Africa, Malawi, Angola, Uganda and Mozambique Together Comprise approx. 70% of the Total Market Volume
The countries with the highest consumption were Nigeria (17.2% of African consumption) and South Africa (16.8%), followed by Malawi (10.7%), Angola (9.4%), Uganda (8.2%) and Mozambique (8.1%). The other countries together made up 30% of pork consumption in Africa.
The highest annual rates of growth in terms of pork consumption from 2007 to 2017 were recorded in Malawi, with a +20.5% per year, the Côte d'Ivoire, with +11.8% per year, and Zambia and Angola, with +9.7% per year and +7.1% per year, respectively. Consequently, Malawi significantly strengthened its share in terms of total consumption, from 2% in 2007 to 11% in 2017. The Côte d'Ivoire (+2 percentage points) also increased its share in total consumption. By contrast, the shares of Nigeria and Zimbabwe declined by 2 percentage points, each, over the period under review. The shares of Zambia, Angola and other countries have not observed any significant changes over the past decade.
Amongst the leading consuming countries, high levels of per capita consumption were recorded in Malawi (9.2 kg/year in 2017), Angola (5.0 kg/year), South Africa (4.7 kg/year) and Mozambique (4.4 kg/year), which all remained significantly higher than the global average per capita consumption figure of 0.2 kg/year. In Malawi, the rise in pork consumption can be explained by the increase in domestic production. As a result of state efforts to support pig farmers, output in the country has observed an almost sevenfold increase over the past ten year period and now fully supplies the domestic market. Per capita consumption, therefore, surged at a peak average annual rate of +17.0%. The state support initiatives in Malawi also incurred import restrictions, introduced to curb the amount of imported products penetrating the local market.
The Pork Market in Africa Is Expected to Grow to 2.1M Tonnes by 2025
Pork is one of the most popular types of meat in Africa. The consumption of pork depends on a range of factors, such as per capita income, population, urbanization and dietary diversity. It is also affected by consumption of alternative types of protein such as chicken and beef. Chicken is the biggest competitor to pork consumption, since chicken is more affordable meat. Pork, however, provides an alternative to beef and lamb: the current relatively high lamb and beef prices are due to the herd rebuilding phase after the drought, which supports the consumption of more alternative meat like pork.
Pork is mostly consumed in Sub-Saharan Africa, while in the North African countries the volume of consumption is close to zero, due to religious restrictions on pork in those countries which are predominantly Muslim. Amongst the Sub-Saharan countries, the largest volume of pork consumption occurs in Eastern Africa. One of the key factors, therefore, to influence further market growth, remains the economic performance of Sub-Saharan Africa.
According to World Bank projections, Sub-Saharan Africa GDP is expected to increase to +3.2% in 2018 and +3.5% in 2019. In comparison, GDP in 2017 amounted to +2.6%. The second driver in terms of market development is population growth, thereby leading to higher pork demand. The population of Africa is also predicted to grow in the medium term. The increased demand for pork, against a rising population, will promote the further development of domestic production, such as new pork producers entering the market. Pork production remains an attractive prospect for livestock producers, as pigs benefit from fast growth rates and good feed-to-meat conversion ratios. Over the past decade, production has steadily increased and projections indicate that this upward positive trend will continue in the medium term.
Factors currently restraining market growth include frequent epidemics of swine viruses and diseases: these can result in the animals dying, which in turn leads to a fall in the volume of production and market supplies. The introduction of a suitable policy to prevent viruses and disease from spreading may further support the stability of the industry.
In view of the factors mentioned above, the current market upward positive trend is set to continue over the next seven-year period. Market performance is likely to remain unchanged, expanding with an anticipated CAGR of +3.3% for the seven-year period from 2018 to 2025, which is then projected to lead the market volume to 2.1M tonnes by the end of 2025.
The Production of Pork in Africa Is Continuing to Increase Steadily
The production of pork in Africa reached 1.5M tonnes in 2017, expanding with a CAGR of +3.6% per year, from 2007 to 2017. Overall, production increased steadily over the past decade, surging by 42%. In value terms, production was estimated at $3.0B in 2017. Over the last year, it recovered after falling from its peak figure achieved in 2012. The significant fluctuations observed in the volume of production in value terms can be explained by the changes in producer prices, against the unstable prices for animal feed, namely for corn and soybean. The prices for corn increased significantly from 2010-2012, accounting for the tangible rise in the pork production value over this period; prices then regained their outset level.
Malawi Emerged as the Fastest Growing Pork Producer in Africa
Nigeria and South Africa appeared as the key African pork producing countries, with an output of about 276K tonnes and 246K tonnes in 2017, together accounting for 35% of total output. The other major producers were Malawi (11.5%), Uganda (8.8%), Mozambique (8.5%) and Angola (8.0%).
In Malawi, production levels increased by +21.2% annually from 2007 to 2017, largely as a result of the state initiatives introduced to support pig production. These included encouraging farmers to create cooperatives to improve bargaining power, reduce costs and benefit from the improved extension services emerging. These measures are also designed to promote and ensure the reduction of poverty and sustainable economic growth in the country.
Most of the other major producing countries also increased their pork output. From 2007-2017, annual rates of growth remained especially high in Angola (+9.0%), while South Africa (+2.9%), Nigeria (+2.8%), Mozambique (+2.6%) and Uganda (+2.2%) recorded more moderate paces of growth. Malawi (+9 percentage points) and Angola (+3 percentage points) improved their position in terms of African pork production, while the other regional leaders remained relatively stable throughout the analyzed period.
Against the Other Countries in Africa, the Côte d'Ivoire Appears the Most Reliant on Imports
In 2017, imports accounted for only 8% of African pork consumption, a figure increased slightly (+ 2 percentage points) against its outset level. Due to relatively negligible trade intensity figures, imports and exports should not be regarded as strong factors influencing the regional market dynamic in the medium term. In terms of the key pork-consuming countries in Africa, the Côte d'Ivoire (83%), Angola (21%) and South Africa (10%) all recorded a significant share of imports in consumption. In the Côte d'Ivoire, where production figures remain too insignificant to satisfy rapidly increasing consumption indices, the past decade has seen a strong rise in imports, therefore the Côte d'Ivoire now constitutes the most attractive prospect in Africa for foreign exporters of pork.
South Africa Emerged as the Largest Pork Exporter in Africa
In 2017, the total volume of African pork export amounted to 10.9K tonnes. South Africa was the leading exporter, with its export volume equal to 9.3K tonnes (86%). It was followed by Kenya (7%) and Namibia (6%). The shares of other countries remain insignificant, at approx. 1%. South Africa demonstrated the highest rate of growth in terms of exports at +27.4% per year. It was followed by Egypt (+16.9%) and Namibia (+10.9%).
Angola Remains the Largest Pork Importer
In 2017, the total volume of product imports amounted to 126K tonnes. Angola emerged as the leading importer, with a volume of 32K tonnes (25%). It was followed by the Cote D’Ivoire (23%), South Africa (21%), Congo (12%) and Gabon (6%).
Mozambique demonstrated the highest rate of growth at +51.1%, but its volume is insignificant. Amongst the significant importers, the Congo indicated the highest rate of product import growth, at +21.8%, followed by the Cote D’Ivoire (+20.1%); this enabled those countries to enter the top-5 pork importing markets in Africa. As for the other importers, the growth rates were not significant. Angola recorded a rather poor rate of growth (+2.2%), but still retained its position at the largest pork importer.
The total pork imports in Africa in value terms were equal to $218M. In terms of import value, South Africa earned the largest share, with 33%. It was followed by Angola (27%), the Cote D’Ivoire (9%), the Congo (8%) and Gabon (5%). In terms of the rate of growth, the trend remains similar to that of import volume growth.
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