Projected oilcake demand for animal consumption in 2015, 2020 and 2025
Prepared by JSG Joubert (December 2011)

  1. Introduction

    1. The vision, mission and objectives of the PRF focus, inter alia, on the promotion of local production of protein to satisfy the growing demand for animal production. Based on that, projections are determined regularly to indicate future protein requirements for animal consumption.

      If those figures are known, one can calculate the required increase rate of local protein production to satisfy certain set objectives. This means that progress of the PRF's various actions can be measured. For purposes of this exercise, the focus is on plant protein only, more specifically, oilcake.

    2. The actual oilcake consumption, shown in the AFMA 2010/2011 Annual Report, was used as basis for projections for 2015, 2020 and 2025. The AFMA Annual Report does not show oilcake consumption according to animal species. As such, the APR model was used, as in the past, to divide oilcake consumption in the basis year according to animal species. These calculations are essential elements of the projections, because the future demand for oilcake, for animal consumption, must be determined based on the future demand for animal products such as meat, dairy, etc within a growing population.
    3. The Nieuwoudt/McGuigan model is used to, given the future human demand for animal products, determine the projections for future oilcake demand.
    4. Other variables that are important for the projections, are estimates relating to population growth according to race. In this regard, a distinction is made between the urban and rural black population. Expected growth of income is also shown per race and provided according to low and high income growth scenarios. This distinction includes a differentiator in terms of urban and rural black populations. Another variable that is taken into account, is the income elasticity of various animal products per population group. Protection tariffs that apply to different animal products are fed into the model. Population growth and income growth figures are obtained from BMR Unisa.

      Table 1

      Total oilcake consumption per animal species for 2010/2011
        Sunflowers Groundnuts Soybeans Cotton Canola Lupins Other Total
      Species Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes
      Broilers 0 0 530 545 0 0 0 0 530 545
      Broiler breeding hens 13 375 0 111 466 0 0 0 0 124 841
      Laying hens 4 622 0 233 118 0 0 0 0 237 740
      Sheep 9 901 0 0 312 0 0 0 10 213
      Cattle 171 550 0 48 478 133 355 0 0 17 335 370 718
      Pigs 2 954 0 190 138 0 14 273 5 142 0 212 507
      Dairy 116 645 0 85 932 0 0 11 741 17 335 231 653
      Ostriches 3 989 0 18 598 2 535 8 552 0 0 33 674
      Horses 7 019 0 6 183 1 580 0 710 0 15 492
      Aquaculture 0 0 664 0 0 0 0 664
      Pets 22 991 0 65 946 0 0 407 0 89 344
      Total 353 046 0 1 291 068 137 782 22 825 18 000 34 670 1 857 391

      Note: Information from AFMA 2010/2011 Annual Report. Allocation per animal species according to APR model.

  2. Projected oilcake demand

    1. Projections are based on 2010/2011 as base year. The oilcake consumption in the base year is the actual consumption figures obtained from the AFMA Annual Report for the period 1 April 2010 to 31 March 2011. The total oilcake consumption in the said period was 1 857 391 tonnes. It is essential to mention that oilcake consumption includes full fat products inverted into oilcake.
    2. The projections for 2015, 2020 and 2025 are based on four scenarios:
      • High income growth maintaining protective tariffs.
      • High income growth phasing out protective tariffs.
      • Low income growth maintaining protective tariffs.
      • Low income growth phasing out protective tariffs.

      Table 2

      Income growth
        Asian Urban Black Rural Black Coloured White
      Low % 2.2 1.7 -0.6 1.4 2.4
      High % 4.0 3.4 0.0 1.9 3.9
    3. In terms of previous projections, the income growth percentages changed marginally. Income growth figures for the Asian and rural black population remained unchanged. Income growth figures for the other population groups were adjusted marginally lower.

      Table 3

      Projected population growth per year from 2010
        Asian Urban Black Rural Black Coloured White Black Total population and growth
      Base year Total and growth (%) per year
      2010 1 274 867 24 123 765 16 082 510 4 539 790 4 565 825 40 206 275 50 586 757
      2015
      %      		 1 288 647
      0.22      		 24 788 475
      0.55      		 16 525 650
      0.55      		 4 654 012
      0.5      		 4 508 351
      -0.21      		 41 314 126
      0.55      		 51 765 136
      0.46
      2020
      %      		 1 294 133
      0.15      		 25 487 488
      0.55      		 16 991 659
      0.55      		 4 735 700
      0.42      		 4 424 824
      -0.31      		 42 479 147
      0.55      		 52 933 804
      0.45
      2025
      %      		 1 298 110
      0.12      		 26 209 574
      0.55      		 17 473 049
      0.55      		 4 811 237
      0.39      		 4 336 422
      -0.34      		 43 682 623
      0.55      		 54 128 391
      0.45
    4. The latest population figures are available from UNISA, but due to costs constraints, it is not obtainable and the latest population statistics were used. Compared to the previous projection report, the projected population growth figures for all population groups, except whites, are higher.

      Table 4

      Projected oilcake demand for 2015, 2020 and 2025 relating to four (4) different scenarios ¹
          Annual growth from base year Projection 2015 Annual growth from base year Projection 2020 Annual growth from base year Projection 2025
      Scenario Base year 2010/2011 % Tonnes % Tonnes % Tonnes
      Scenario 1 1 857 391 2.75 2 127 336 2.72 2 429 057 2.57 2 718 485
      Scenario 2 1 857 391 0.05 1 861 624 0.90 2 031 818 1.14 2 202 812
      Scenario 3 1 857 391 1.68 2 018 643 1.76 2 211 786 1.67 2 379 979
      Scenario 4 1 857 391 -0.51 1 810 132 0.34 1 921 729 0.57 2 021 567

      ¹   Scenario 1: High income growth keeping protective tariffs in place.
      Scenario 2: High income growth phasing out protective tariffs.
      Scenario 3: Low income growth keeping protective tariffs in place.
      Scenario 4: Low income growth phasing out protective tariffs.

  3. Oilcake supply and demand

    1. Further calculations are based on the projected figures of scenario 1. The income growth figures per category of population indicated as high, are not beyond the growth rates expected for the medium- to long-term. Protective tariffs on imported livestock products are still in place and remained more or less the same over the past period of about 17 years. There are no indications that this will change substantially within the foreseeable future.
    2. In addition, local production of oilcake will be compared to local consumption, as well as future projected oilcake demand. In the 2010/2011 base year, the total oilcake consumption was, according to Table 4, 1 857 391 tonnes and local oilcake production was 624 912 tonnes, comprising 33,6% of total consumption. Table 5 shows local oilcake production expressed as a percentage of total consumption for the past four seasons.

      Table 5

      Local oilcake production as percentage of total consumption
        Local oilcake production Total oilcake consumption Percentage of total consumption
      Period Tonnes Tonnes %
      2007/2008 494 557 1 758 185 28.1
      2008/2009 565 181 1 664 916 33.9
      2009/2010 701 030 1 743 137 40.2
      2010/2011 624 912 1 857 391 33.6
      Average 596 420 1 755 907 34.0
    3. To mitigate the effects of, inter alia, variation in climate, on production and price ratios on short-term production decisions, the average figures for four seasons are used to express local production in terms of total consumption. Table 5 clearly illustrates the large gap between total consumption of oilcake and local oilcake production.

  4. Rates at which local oilcake production must increase to provide for the projected consumption demand

    1. An important PRF objective is, to replace imported oilcake by locally produced oilcake, through the implementation of its actions. That is why it is important to know at which annual rates local oilcake production must increase to reduce the gap between local production and projected consumption. Lastly, it is possible to determine the percentage of locally produced oilcake relating to projected consumption in 2015, 2020 and 2025, if local production were to grow at the historical annual growth rate (see table 9).

      Table 6

      Percentage growth required for annual local oilcake production to achieve certain targets in terms of projected consumption in 2015
      Projected consumption 2015 Required growth rate of local production per annum from 596 420 Oilcake quantity Percentage of projected consumption
      Tonnes % Tonnes %
      2 127 336 3.9 723 294 34
      2 127 336 12.3 1 063 668 50
      2 127 336 23.3 1 701 868 80
      2 127 336 28.9 2 127 336 100
      Local growth at historic rate
      2 127 336 5.16 767 017 36.0

      Table 7

      Percentage growth required for local oilcake production to achieve certain targets in terms of projected consumption in 2020
      Projected consumption 2020 Required growth rate of local production per annum from 596 420 Oilcake quantity Percentage of projected consumption
      Tonnes % Tonnes %
      2 429 057 3.3 825 879 34
      2 429 057 7.4 1 214 528 50
      2 429 057 12.5 1 943 246 80
      2 429 057 15.1 2 429 057 100
      Local growth at historic rate
      2 429 057 5.16 1 268 560 46.7

      Table 8

      Percentage growth required for local oilcake production to achieve certain targets in terms of projected consumption in 2025
      Projected consumption 2025 Required growth rate of local production per annum from 596 420 Oilcake quantity Percentage of projected consumption
      Tonnes % Tonnes %
      2 718 485 2.9 924 285 34
      2 718 485 5.6 1 359 242 50
      2 718 485 9.0 2 174 788 80
      2 718 485 10.6 2 718 485 100
      Local growth at historic rate
      2 718 485 5.16 1 268 560 46.7
    2. In die projeksie verslag wat gedurende Desember 2011 opgestel is en gebaseer is op die 2010/2011 basisjaar van AFMA se werklike verbruiksyfers was die historiese groeikoers per jaar waarteen plaaslike oliekoek produksie plaasgevind het 5,16%. Dit was bereken oor 14 seisoene. Plaaslike oliekoek produksie vervat in hierdie verslag loop oor 15 seisoene en is die groei 6,34% per jaar. Uit die aard van die saak sal sekere mikpunte gouer bereik word.

      Die hoër neigende jaarlikse groeikoers in plaaslike produksie van oliekoek is hoofsaaklik as gevolg van wat die afgelope paar seisoene plaasgevind het. As die groeikoers vir die afgelope 5 seisoene bereken word dan kom die jaarlikse groeikoers te staan op 12,5% wat 'n verdubbeling is van die jaarlikse groeikoers oor die afgelope 15 seisoene.

      Die hoër neigende jaarlikse groeikoers in plaaslike produksie van oliekoek is hoofsaaklik as gevolg van wat die afgelope paar seisoene plaasgevind het. As die groeikoers vir die afgelope 5 seisoene bereken word dan kom die jaarlikse groeikoers te staan op 12,5% wat 'n verdubbeling is van die jaarlikse groeikoers oor die afgelope 15 seisoene.

      Tot onlangs was voldoende perskapasiteit vir sojabone as 'n struikelblok beskou maar gegewe die groei in perskapasiteit wat tans besig is om plaas te vind is hierdie aspek nie meer 'n knelpunt nie.

      Table 9

      Production and consumer trends relating to protein commodities
      Commodities
        Area planted (Ha) Production (Ton)
      Fishmeal con­sumption Fishmeal pro­duction Fishmeal imports Oil­cake con­sumption Oil­cake pro­duction Oilcake imports Soy­beans Sweet lupins Canola Soy­beans Sweet lupins Canola
      Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Ha Ha Ha Tonnes Tonnes Tonnes
      1996/1997
      196 039 78 430 117 809 832 600 400 675 431 925 87 000 n/a n/a 76 806 n/a 8 734
      1997/1998
      187 374 100 000 87 374 785 401 319 006 466 395 125 000 n/a n/a 120 000 n/a 11 000
      1998/1999
      96 267 88 340 7 927 1 080 354 493 581 586 773 130 500 16 300 17 000 200 900 9 000 21 000
      1999/2000
      127 386 95 000 32 386 1 063 338 554 903 508 435 93 787 19 000 25 000 188 367 13 000 23 000
      2000/2001
      142 848 110 000 32 848 1 021 862 514 020 507 842 134 150 14 705 19 145 148 720 17 360 26 549
      2001/2002
      118 414 128 000 0 1 149 224 482 448 666 776 124 150 14 785 27 000 209 705 16 338 25 750
      2002/2003
      82 988 123 000 0 1 210 396 472 311 738 085 100 150 11 000 33 000 216 000 11 700 37 975
      2003/2004
      127 000 122 000 0 1 121 460 489 413 632 047 135 000 10 100 44 200 136 500 4 040 40 770
      2004/2005
      127 000 132 000 0 121 593 416 736 795 857 150 000 7 100 44 250 220 000 3 950 32 000
      2005/2006
      80 000 101 000 0 1 414 338 572 231 842 107 240 570 14 100 40 200 272 500 14 100 44 200
      2006/2007
      40 240 97 500 0 1 635 525 608 370 1 027 155 183 000 16 000 32 000 424 000 14 400 38 050
      2007/2008
      50 000 102 200 0 1 758 185 494 557 1 263 628 165 800 14 000 33 260 205 000 13 300 39 840
      2008/2009
      75 000 90 000 0 1 664 927 565 181 1 099 746 237 750   34 000 282 000   30 800
      2009/2010
      58 000 111 500 0 1 743 137 701 031 1 042 106 311 450   35 060 516 000   40 350
      2010/2011
      45 000 97 000 0 1 857 395 624 912 1 232 578 418 000   34 820 560 950   36 900
      2011/2012
                  460 000   43 510 708 750   57 340
      Average annual growth %
      -4.29 2.56 48.30 6.48 5.16 8.19 15.19 3.40 9.61 23.21 25.27 17.08
       
      -6.46 2.17 48.30 7.73 6.36 10.17 9.92 3.40 10.59 17.50 25.27 18.28

      Figure 1

      Oilcake consumption, production and imports

      Graph showing oilcake consumption, production and imports

      Figure 2

      Areas and production of protein commodities

      Graph showing areas and production of protein commodities

  5. A few remarks and conclusions

    1. The credibility of projections is usually questioned, because the outcomes of the model are as good or bad as the assumptions and empirical data used. An independent study by BFAP estimates that the soy oilcake consumption in 2020 will be 1 818 200 tonnes. This is according to the scenario that the PRF found most acceptable. Currently the inclusion level of soy oilcake and full fat soy (the latter as oilcake equivalent) is 70% of the total oilcake consumption in die base year. If this applies to the BFAP projection of 1 818 200 tonnes soy oilcake, it would result in a slight over-estimate of the total oilcake consumption estimated according to the PRF projections. However, the trend is that the level of inclusion of soy oilcake in the total oilcake consumption increased over time and if the inclusion level were 75% soy oilcake by 2020, then the BFAP projection is almost 100% equal to the PRF estimates. This means that there are good reasons to assume that the estimates generated in these PRF models are realistic.
    2. Table 5 clearly shows the significant gap between locally produced oilcake and total consumption. At the growth rate of local oilcake production to date, it will not be possible to provide in 50% of the local demand by 2015, 2020 and 2025. The historical growth rate refers to the annual growth rate of oilcake production over the past 14 years (see Table 9).
    3. If the increased rate of the past few years, in terms of soy production were sustainable, the situation would change totally. The annual growth rate for soy production (in tonnes) over the past 14 years was 23,71% per year. This was mainly due to large expansion of areas planted since 2008/2009.
    4. The fact that the growth in area planted every year, for soybeans and canola is 15,19% and 9,61%, compared to the annual respective average yield growth of 23,21% and 17,06% indicate technological progress, which is important for the economy of a crop.
    5. Given the assumption that soy oilcake will comprise 75% of the total oilcake from 2015, it implies that 1 595 502 tonnes soy oilcake will be required in 2015. Translated into soybeans it means that 1 994 378 tonnes soybeans will be required to provide for the consumer demand. This does not include soybeans for human consumption, nor exports that may take effect. For 2020 the demand for soy oilcake will be 1 821 793 tonnes, or 2 277 241 tonnes soybeans. In 2025 the respective requirements will be 2 038 864 tonnes and 2 548 580 tonnes.
    6. From Table 4, it is clear that protective tariffs on the import of live stock products for human consumption will be the single most important factor affecting the demand for protein for animal consumption. A reduction in the protective tariffs will decrease the protein demand for animal consumption and vice versa, with a negative effect on employment opportunities and loss of foreign exchange.
    7. Given the projections and current backlog, as well as aspects such as foreign exchange, employment opportunities, etc all involved in the canola and particularly the soybean industry, will have to effect renewed attempts to show more progress.