The agro-processing value chain in South Africa is one of the country’s largest and most strategically important manufacturing systems, contributing roughly R49 billion to the economy, supporting over 470,000 jobs, and accounting for 23% of total manufacturing output. But behind these strong headline numbers lies a persistent challenge: South Africa continues to import large volumes of beef and hides that its own value chains are well placed to produce.
Productivity SA’s latest research report, Exploring the Value Chain in the Agro-Processing Industry, investigates why, focusing on two of the sector’s most strategically important value chains: beef (red meat) production and processing, and hides and leather. The report maps beneficiation opportunities across both chains and benchmarks South Africa against two key global competitors, Australia and India, in line with the ambitions of the dtic’s Agriculture and Agro-processing Master Plan (AAMP).
Why the Agro-Processing Value Chain Matters for South Africa
Agro-processing has grown faster than the South African economy and the manufacturing sector as a whole, and it carries strong backward linkages into primary agriculture, meaning growth here creates new markets and income for farmers too. The beef and hides and leather value chains are two of the sector’s most established, spanning input suppliers, feedlots, abattoirs, tanneries, processors and retailers.
Yet the research found that despite this maturity, South Africa remains a net importer of beef, and its hides and leather industry struggles to compete on price in the second, third and fourth stages of processing, raising an important question for policymakers and industry stakeholders: is South Africa’s agro-processing sector beneficiated enough on paper, but too constrained in practice to capture the value it should?
Key Findings from the Beef, Hides and Leather Value Chain Analysis
Using value chain mapping, policy review, and international case study comparison against Australia’s beef industry and India’s leather industry, the report identifies three consistent patterns shaping South Africa’s agro-processing competitiveness:
Production effects — beef production, rather than beneficiation capacity, is the binding constraint in the red meat industry; local production has fallen behind consumption, driving continued imports from South America.
Cost effects — raw hide prices in South Africa have risen 56% since 1997, compared with far smaller increases in Germany and the US, leaving local tanneries uncompetitive against countries such as India, where hides are 30–40% cheaper.
Trade effects — South African beef exports reached almost 28,000 tons worth R1.11 billion between 2013 and 2022, with Asia overtaking Africa as the leading destination, while the leather sector remains primarily export-driven in its highest-value automotive segment, leaving the non-automotive and informal sectors under-supported.
Barriers behind these patterns include fragmented primary production among emerging and communal farmers, weak supply chain linkages into commercial processing, outdated meat classification standards, SPS compliance barriers limiting export market access, and a shortage of price-competitive, locally produced raw hides.
What This Means for South Africa’s Agro-Processing Value Chain
The report’s implications are clear: South Africa’s agro-processing value chain is structurally sound, but stronger production capacity, cost competitiveness and market access are needed to unlock further beneficiation.
Drawing on international benchmarks, including Australia’s government-industry co-funded research and development model and disease-free traceability system, and India’s decades-long, government-led strategy to ban raw hide exports and build local processing capacity, the report recommends that South Africa’s approach should:
- Strengthen supply chain linkages between emerging and communal farmers and commercial beef processors
- Improve processing capacity and technical know-how among SMMEs and emerging producers
- Reduce the cost and improve the quality of locally produced raw hides through modernised equipment
- Support SMMEs in rural areas to bring raw hides into formal value chains
- Introduce mandatory national standards and improved traceability for South African beef products
- Advocate for reduced international agricultural subsidies and better export infrastructure
Read the Full Report
This research forms part of Productivity SA’s broader mandate to support evidence-based productivity and competitiveness policy for South Africa’s industrial sectors. The full report includes detailed value chain mapping for both industries, complete case studies on Australia and India, and a full set of policy recommendations for South Africa’s agro-processing sector.
