LARGE poultry producer Astral Foods is starting to look like king of the roost in the Western Cape after taking advantage of tough trading conditions for local chicken producers.
Astral said the tough market conditions over the past two to three years had resulted in a tremendous margin squeeze on (Western Cape) poultry producers, which had led to numerous poultry business closures and subsequent industry consolidation.
So no surprise then that at the end of March the plucky Astral acquired certain poultry assets previously owned by Darling Fresh Chicken. Darling Fresh Chicken is currently in liquidation.
Astral CEO, Chris Schutte, said the abattoir assets previously owned by Darling Fresh Chicken recently came up for sale on a liquidation auction.
He said Astral submitted a bid for the abattoir equipment, reckoning these assets would add value to its existing operations.
“An amount of R5.1m secured the abattoir processing equipment for Astral.”
Schutte said a large part of the Darling Fresh Chicken equipment would be used to expand capacity at Astral’s County Fair operation in the Western Cape. He said it was unfortunate that the local poultry industry had seen the demise of a number of smaller poultry producers.
“The tough market conditions over the past two to three years have resulted in a tremendous margin squeeze that has had a severe impact on non-integrated small- to medium-sized poultry producers.”
Schutte said a number of these producers continue to face financial distress. “The acquisition of distressed assets supports our commitment to continued local poultry production and supply.”
Only weeks after clinching the Darling Fresh Chicken deal, Astral also entered into a long term supply agreement with Quantum Foods. Western Cape-based Quantum is the struggling poultry subsidiary of Paarl-based consumer brands giant Pioneer Foods.
Quantum will supply Astral’s County Fair abattoir in the Western Cape with approximately 550,000 broilers per week.
The agreement will see Quantum maintaining their breeding operations as well as the rearing of broilers, with Astral Foods purchasing the broilers from Quantum for further processing, distributing and marketing. Astral Foods will need to increase capacity at its County Fair operation to accommodate the additional broilers, and will invest approximately R80 million in expanding its facilities (and creating “a significant number of new jobs”.)
The completion of the expansion of the facilities at County Fair is expected to take about five months. Once completed Astral Foods’ total broiler processing capacity will increase to approximately 5 million birds per week and the company expected that the project would deliver good value to all stakeholders.
By Jenni McCann