Astral Foods Ltd. (ARL) said Mozambique is a country to chase poultry investments as South Africa’s largest chicken producer by sales diversifies into neighboring markets to avoid import quotas and benefit from higher profit margins.
The Mozambican government knew of their efforts to invest in the country, Chief Executive Officer Chris Schutte said in an interview. It was a country where investments could be chased and chicken eaten was a fraction of South Africa.
The company, based in Pretoria, on Oct. 5 opened a hatchery 45 kilometers (28 miles) southwest of Mozambique’s capital city Maputo after owning a feed mill in the country since 2000. Astral also owns a feed mill and hatchery in Zambia.
South Africans ate an average 36 kg a year of chicken compared with about 7 kg in Mozambique and 12 kg in Zambia, South African Poultry Association Chief Executive Officer Kevin Lovell said. At the same time South Africa’s poultry producers are facing increased competition at home from Brazilian and European imports.
Astral cut 150 jobs in August and froze pay for its 12,000 employees Oct. 18 as it also struggles with higher feed costs. Yellow corn and soy cake, a by-product of crushing soybeans, accounts for about 74% of the company’s costs. About 20% of chicken eaten in South Africa is imported.
Source: Bloomberg Businessweek