A critical analysis of the effect of selling consortiums in the pork industry on profitablity: an exploratory study in KZN.

Abstract

The pork industry in South Africa is faced with many challenges some of which have been exacerbated with the trend toward globalisation. The success of the individual farmer is dependent upon co-operative agreements, achieving economies of scale, adding value to the commodity product pork and producing the end product efficiently enough to be competitive in the long-term whilst adjusting to the highly volatile market. The objective of this study was to determine whether the use of a marketing consortium was in principle an appropriate means of increasing profitability of individual farming operations. A secondary objective was to determine what the processing companies thought of the proposed selling consortium and how they would react to the concentration of supply that would result from the formation of a marketing consortium. The secondary research was based on a literature survey of current pork journals, articles from South African pork magazines, statistics from industry reports, textbooks on international trade and marketing, the Internet and newspapers. To evaluate the findings of the literature survey, a questionnaire using Likert type scales was devised and empirically tested among selected samples within the pork industry in KwaZulu-Natal. The literature review and the results from the questionnaire established that the formation of a selling consortium or collaborative relationships would have the potential to be mutually beneficial to both pork producers and pork processors. As a result of this it is felt that marketing consortiums have a place in the pork industry. The scope of this research is limited to the requirements of a dissertation that fulfils the partial requirements of a Masters in Business Administration. The sample sizes were small as the research was confined to the KwaZulu-Natal pork industry. In order to facilitate the reading of the dissertation and to simplify referencing of sources from the Internet the term "online" has been used to replace lengthy Internet addresses. The full address, however, is included in the list of references at the end of the dissertation.