Local industry leads at North West summit

[Image] The speakers at the recent summit were
(front, from left) Bafana Mabale, Lefty
Mogorosi, Refilwe Thlabanyane, Mojalefa
Nale, (back, from left) Miller Matola, Leo
Makgamathe and Jaco Viljoen.

[Image] Opti Chicks manager Jaco Viljoen spoke
about his company’s contribution to
growth and sustainability in the province.

[Image] Opti Chicks produces day-old broilers for
the local market.
(Images: Nicky Rehbock)

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Nicky Rehbock

North West, one of the country’s agricultural and mining powerhouses, was the latest province to host a Brand South Africa stakeholder summit. The event, held on 28 November 2011, showcased local poultry operation Opti Chicks and its innovative business model.

Taking place in each of the nine provinces, the summits aim to increase provincial participation in the nation-branding effort and encourage active citizenship – which, in turn, will help position the country as a top investment and tourism destination.

Each event presents South Africans who, through their work and community initiatives, are already active ambassadors for the country and epitomise the unique characteristics, or pillars, of the South African brand – ubuntu, diversity, sustainability, possibility and innovation.

Seizing opportunity

Having identified a gap in the market for day-old chicks over three years ago, Opti Chicks has become one of the leading suppliers in the province. It sells the birds to other poultry companies, which then rear the hatchlings for consumption.

The North West is the biggest broiler-growing area in South Africa, and Opti Chicks is ideally placed to make the most of opportunities in such a niche segment of the production chain.

What adds value to this company and sets it apart from competitors is the fact that it concentrates solely on producing top-quality day-old birds, whereas most other players in the industry are fully integrated.

This means they focus on the entire growing cycle, from breeding chickens and processing their meat to distributing and marketing the end product.

“Opti Chicks was started in 2008 by NWK, a 102-year-old agriculture-based business in the province with its head office in Lichtenburg. With an initial investment of R150-million (US$18.4-million), the original plan was to produce 350 000 day-old chicks per week,” says manager Jaco Viljoen.

“But after we secured a supply agreement with one of the leading role-players in the industry, and they agreed to buy that number from us, we decided to go slightly bigger and produce 500 000 chicks per week. Other stakeholders in North West also needed day-old chicks, so we decided we could sell the difference to them.”

Training and development key

With the supply contract in place and the production capacity decided upon, Opti Chicks set about building up the business. They bought a 320ha farm between the towns of Ottosdal and Coligny in the province and began recruiting staff.

Some 90% of staff were unskilled and knew little about the business when they started – one of the company’s biggest challenges, according to Viljoen.

But thanks to rigorous ongoing training and development, Opti Chicks has rapidly amassed skills and boosted competency and efficiency. So far the company has created 182 jobs and plans to double that and its capacity by 2014.

“In the beginning, through innovative thinking and planning, we realised that we were able to use our existing incubation equipment to further increase our capacity from 500 000 to 650 000 chicks per week, which amounts to about 34-million birds per year. Our operation now accounts for 3.3% of the total production in South Africa,” Viljoen adds.

Hygiene is one of Opti Chicks’ top priorities, as the business is highly sensitive to poultry diseases.

“We have a shower facility at the farm gate for all personnel entering the premises, and require them to wear protective clothing. We need to make sure there is absolutely no contamination from the outside.”

Viljoen attributes the success of his operation to good management practices, thorough training, proper implementation of systems and not overcapitalising on staff and infrastructure.

“Our contribution to North West includes job creation and economic stability and sustainability, meaning that no chicks have to be brought in from other provinces. All our inputs, such as maize for feed and bedding material, are also all sourced from North West, which means we help support other local businesses as well.”

Growing its African footprint

Opti Chicks is currently looking to buy another farm to accommodate expected capacity expansion.

“We currently export fertilised eggs for broiler operations in Nigeria, Mozambique, Zimbabwe, Botswana and other states on the continent, and are planning to expand our footprint to the rest of Africa in the next 10 years – we’re now looking for strategic partners for that. We want to be prepared for any growth or new developments when they come our way.”

Some 32kg of poultry was consumed per capita in the country in 2010, followed by 17.65kg of beef, 4.58kg of pork and 3.16kg of mutton and goat – indicating that chicken is the biggest protein source for South Africans.

In comparison, the per capita poultry consumption in the US in 2010 was 43kg, meaning there’s potential for the local industry to expand by 40% to 50% in the coming years.

The challenge here is to ensure that this growth comes from South Africa, as 16% of domestically consumed poultry is now imported – and 73% of this from Brazil.

“Because of the strength of the rand and the cost of maize in South Africa, imports increased by 15% between 2009 and 2010. And from January to July 2011, 181 554 tons were imported – this is estimated to increase to 311 235 tons by the end of the year.

“If half of that could be produced locally, the potential new jobs in the chicken and feed industry could amount to 10 000,” Viljoen says.