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Astral Buys Abattoir, Poultry Assets in Liquidation Auctions

31 March 2014

SOUTH AFRICA - Astral Foods has added to its operations through two liquidation auctions this month.

A number of small and medium-sized poultry producers have, in recent months, succumbed to difficult trading conditions, having either filed for business rescue, been liquidated, or swallowed by larger companies. BusinessDay reports that the industry is seeking protection against cheap European imports, while it has reported a sharp rise in feed costs due to local shortages and the weak rand.

Astral said it had acquired abattoir assets for R5.1m that were previously owned by Darling Fresh Chicken, a Western Cape-based producer in liquidation.

Earlier this month, Astral said it had acquired poultry assets that belonged to Argyle Poultry Farms in KwaZulu-Natal, following a liquidation sale. The company expects the acquisitions to benefit its Mountain Valley operation in KwaZulu-Natal while it intends using some of the equipment to grow capacity at Astral’s County Fair operation in the Western Cape.

Astral CEO Chris Schutte 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 nonintegrated small to medium-sized poultry producers. A number of these producers continue to face financial distress," he said.

South African Poultry Association CEO Kevin Lovell said last week the International Trade Administration Commission of SA would be going to Europe at the end of this month to verify the information European producers provided.

"We think it’s realistic to expect a preliminary determination by the end of May," thereby providing interim protection from cheap European imports.

Mr Lovell said local producers were paying "much more than our competitors" due to feed shortages locally and the weak rand.

"In December, we were paying R1,000 a tonne more for maize than our main competitors in Brazil and the US."

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