Country Bird is in talks with the International Finance Corporation (IFC) over the funding of the poultry producer’s African expansion, it was announced on Monday.
According to I-Net Bridge, the IFC is considering the possibility of investing $25 million in the form of a convertible instrument in the company so as to enable it to further its African expansion.
It is understood that the funding would be utilised to increase chick production in Zambia and Botswana‚ to expand the feedmill capacity in Zambia‚ to increase broiler meat processing capacity and to construct soybean deactivation plants at two of its feedmills.
Country Bird cautioned that if the talks succeeded‚ they may have a material on the company’s share price.
The market liked this announcement as the share price gained 11.4 percent on the JSE’s early trade to R3,90.
South African poultry producers are seriously looking at other markets to grow their operations.
This is because they are under extreme pressure in South Africa as record levels of imports and high feed raw material input costs plague the industry.
Country Bird’s peer, Rainbow Chicken, recently said the average monthly chicken imports over the past six months were 22 430 tons. The over-supply of chicken had led to pricing that is lower than three years ago in some months, despite the record high input costs.
The significant reduction in chicken margins had placed the local industry under severe financial stress, with a number of the smaller producers having closed their doors in the past year.
The South African Poultry Association (SAPA) engaging extensively with government to find an acceptable solution that promotes fair trade while affording protection to local jobs.
In addition, droughts in Argentina and the USA had a significant impact on international maize and soya prices, with the extremely low stock levels in the USA heightening price volatility, Rainbow said.
These high prices were expected to continue until good crops in South America’s current season and better plantings in the USA’s upcoming season were realised.