Building a chicken empire

Over the past 15 years, broiler breeders Anca have climbed the supply chain, turning themselves into a distributor with a chain of stores across the Eastern Cape while expanding their original operation as a fresh chicken supplier. Mike Burgess reports on how a giant grew out of a few corrugated-iron sheds.
Issue date 14 September 2007

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In the early 1990s Tony Isemonger relocated from Mafikeng in the North West province – where he had been involved in a large poultry enterprise – to Stutterheim in the Eastern Cape to begin his own poultry venture. He acquired some land on the outskirts of town, and began building budget gum-pole and corrugated iron broiler sheds, complete with ceilings and roll up curtains. The idea was to begin producing broilers for the live-bird trade in nearby Transkei and Ciskei. By 1993, Tony’s nephew White had joined the business, and together they began building better relationships with rural chicken traders in the villages of the former homelands. Soon, the 2 000 broilers they produced per week were comfortably consumed by a growing demand. Business was so good that by 1995 Tony and Greg were ready to introduce their first small abattoir, with the idea of supplying fresh chicken to a few outlets in East London. The cash trade in live birds “was a critical cash flow component of the initial business plan,” Tony explains.

This significantly contributed to Anca’s ability to launch the abattoir. Most importantly, the new abattoir represented a determination to take control of the broiler value chain, a platform for growth in a vibrant market. However, both the abattoir and the distribution of the finished product demanded significant investment, seriously compounding the already capital-intensive broiler production process. “We were continually financially over-geared,” recalls Tony of these initial stress-filled stages. “It’s not an easy business to create and manage. In the beginning, you can’t afford the hi-tech production assets bigger companies can to exploit extremely narrow profit margins. The very effective mixture of fear of failure, youth and a supportive wife and family were worthwhile substitutes.” In the end, the market didn’t let them down and today, 15 years later, Tony, Greg and their new partner Rob Ross produce 75 000 broilers a week on Anca poultry farms. Some 5 000 of these are still sold live and about 14 000 broilers a day are slaughtered five days a week for distribution across the Eastern Cape. Broilers by volume T he broiler and associated abattoir industry is volume-driven.

As a production environment, Anca’s 30 000 broiler sheds are a vast improvement on their first sheds back in the 1990s. Sophisticated and controlled feeding, drinking, heating and ventilation systems allow for optimal broiler performance and volume production. preferred Cobb, and to a lesser degree Ross, breeds are stocked at 18 birds/m2 and harvested at five weeks, producing broilers between 1,9kg and 2kg. Importantly, says Tony, the market is still significantly under-supplied – fuelled, amongst other things, by the increased spending power of a growing African middle class – and plans are now in place to produce 150 000 broilers a week. A dmittedly this isn’t much compared to other big producers, and the estimated 12 million broilers consumed in South Africa a week, but Anca’s achievements represent the success broilers can bring to hard-working individuals. Today Anca has securely navigated what Tony calls “the crest”, where improved performance and associated volume increases enable the healthy growth of profits. Location, location, location It’s not only a willing market that has ensured Anca’s growth – Stutterheim’s geographical location is an important advantage.

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It’s not only well-situated for live broiler sales, but also for fresh chicken sales to a large surrounding population. Stutterheim also offers a temperate climate with minimal temperature variation, beneficial to broiler production, while the Border area of the Eastern Cape has offered affordable land for expansion, especially during the 1990s. This availability of land has helped Anca achieve successful disease control by making single-aged growing sites possible. According to Tony “Single-aged sites”, stocked with birds the same age, “are kept sufficiently far apart to limit disease”. With access to 220ha of land near Stutterheim and 80ha near the N2, northeast of East London, Anca has been able to comply with such production demands, and is reaping the benefits of efficient disease control. Anca farms are monitored by Dr Herman Bosman, one of the best poultry vets in the country, who regularly audits the farms’ health status. “We follow all his advice,” Tony says.

If Stutterheim has a disadvantage for broiler production, it’s its isolation from the maize belt. Anca’s feed – a fishmeal- and animal byproduct-free diet, sourced from an Epol factory in nearby Berlin – is more expensive in the Eastern Cape, but Anca has always intended to enter the local fresh chicken market and needs to be close to the market. Tony argues it’s more economical to transport feed to the Eastern Cape than to produce broilers near the maize belt and then transport frozen chicken to the market. In the end, he says, the rise in fuel prices is increasing the cost of transporting frozen chicken, which is becoming a challenge for some isolated brands. Again, Stutterheim has proved perfectly situated, on the N6 and central to all major centres in the Eastern Cape. Committed to fresh chicken production “We feel that customers ultimately prefer fresh chicken and are very discerning and aware of what they want,” explains Tony.

He admits the individually quick-frozen (IQF) chicken market is enormous, although at times susceptible to low-priced imports, but believes that customers, if offered an affordable alternative to frozen chicken, will ultimately choose fresh for quality reasons. According to Anca sales manager Steve Turner, in most cases IQF chicken is injected with water or flavour enhancers to increase volume, at rates of up to 30% of the bird’s weight. Offering an alternative has undoubtedly proved successful for Anca, and today the abattoir provides volume orders of prime chilled fresh chicken, while complying with and adapting to health and food safety regulations stipulated by the Department of Health, the Department of Agriculture and major supermarket chains. This fresh trade represents the 75% prime product out of the 88% saleable product recoverable from a broiler. Chicken is either sold as premium quality fresh, mainly in assorted portion packs or as whole, or as premium quality value-added fresh – spiced, marinated, de-boned, crumbed, skinned, etc.

Value-added products constitute 15% of Anca’s prime product fresh chicken sales. They’re the only products Anca injects with flavour-enhancing solution, at a low rate between 8% and 9%, to improve flavour and quality of marinated and spiced products. Special delivery Anca aims to deliver quality fresh chicken to customers within 24 hours of receiving the order. Once an order is received, and the broilers have passed through the slaughtering process, they are cleaned and quick-chilled before being processed, packed, priced, weighed and quickly moved to refrigerated picking rooms. “Quick-chilling ensures freshness, tenderness and maximum shelf life, by reducing the slaughtered carcass temperature to 5ºC before packing,” says abattoir manager Greg Lovemore. The distribution of Anca products across the Eastern Cape is handled by some 10 refrigerated Anca trucks, in conjunction with a Port Elizabeth-based distribution company, Freezer Lines. Today, Anca’s fresh chicken products can be found in supermarket chains like Spar, Pick ‘n Pay and Shoprite Checkers, fast food outlets like Southern Fried Chicken and other retail stores across the Eastern Cape, in towns and cities including Mthatha, Queenstown, East London and Port Elizabeth. Contact Tony Isemonger on (043) 683 1774 or 083 269 5363. |fw