The exit interview … with Astral’s Chris Schutte

South Africa’s own Colonel Sanders, Astral Foods’ Chris Schutte, packs up his desk this Friday after 40 years with the company, 16 of them as CEO. The man knows his chickens! He chatted to Currency about his decades in the business.
6 mins read

Astral’s Chris Schutte is a one-company man of old – and a straight-talking CEO if ever there was one. Ahead of his retirement this week, he spoke to Currency about chickens, John Steenhuisen, and doing business in South Africa.  

It’s quite a thing to look back on 40 years – what are the biggest changes you’ve seen? 

The one thing is the unbundlings we’ve seen over the years; poultry companies never worked in big corporates and you can see that with Rainbow, now out of RCL, Astral out of Tiger, Tydstroom and Quantum out of Pioneer, because you need the focus and it’s a volatile business. And then the services we get from government: we used to transport 85% of our raw materials for feed on rail, now it’s all by road – and that’s why the roads are stuffed.  

Would you say the collapse in government services has led to an exponential cost of doing business here? 

Definitely. We often sit here and say, if you compare us to a farmer in America, or in Western Europe, we’ve got costs that they don’t have. So our production efficiencies are better than theirs – but not our costs, because we have all this added cost of things we have to do that the government is supposed to. You put in hundreds of millions of rands in capital into your generators and water purification and transport by road.  

I have said many times in the past that if government wants to use the Competition Commission to control prices, they must look at themselves first. We’ve got audited results, so don’t look at the price of the chicken, look at our margins, which are paper thin – 1.5% to 2%. 

You’ve been outspoken about government decrepitude for years now. Do you ever feel that they actually listened to you?  

My experience is that they allow you a meeting, and there are people around the table, and you spin your story and tell them about the urgency and the additional cost – and all they report is: “We have met with the role players” – but nothing ever happens. So we take a two-pronged approach: the legal route and the direct route.  

We’re back in court now with two big cases: the one is Standerton, where the government made promises that they would fix it – they’ve done nothing – and then with bird flu compensation from 2017. The law provides that if you have to kill your animals to stop the spread of a disease as a control measure, you need to be compensated for that. But then they came back and said: we agree, but the value of your birds you had to kill was zero, so we can’t pay you anything. We said: what has a zero value? And that’s why [agriculture minister] John Steenhuisen says he doesn’t want to see me or the South African Poultry Association [SAPA], because I’ve got legal proceedings against his department, and I find it absolutely unacceptable.  

That case stems from 2017 and it’s just a legal dispute about the interpretation of the law. But bird flu is coming again – the intensity of it in Europe is building – and we haven’t recovered from the previous avian outbreak in 2023. If it hits us again it will hurt this industry and move up the price of eggs and chicken.  

So we’re saying: if you don’t want to compensate us, at least let us vaccinate to protect our breeding flocks – which is very expensive and hard to come by, but they’re kicking that can down the road.  

You would have expected a bit more pragmatism from the new agriculture minister …  

Yes. And everyone was gung-ho because John Steenhuisen was appointed and he’s from the DA and he’s going to do something – but we can’t see what he’s done so far. In his 100-day report, it was so thin; he spoke about sugarcane farmers and sugar tax, but here we sit with the biggest contributor to the agri GDP and he’s not seeing us. 

It’s hard not to focus on the negatives because we’ve had zero GDP growth for about 15 years now. If it had been different – and we’d had growth of even 2%, say – where do you think a company like Astral might have been? 

Well, what will get us to 2% – government can’t do it, the private sector must do it, but give us something to work on. Not like the Expropriation Bill – that’s done simply to get votes, not to stimulate the country.  The unemployment rate is a time bomb and if you had more people working, consumption would have been much better.  

What the state doesn’t understand is, they say we make a lot of money but it’s a high-risk business. And what do you do with your profits: you first fill the coffers of the government with tax. Whatever is left is a fair spread of paying dividends to your shareholders and then reinvestment in the business. So if you don’t make money you can’t pay taxes, and you can’t reinvest in the business.  

It is one of those industries that will always have variable margins, driven by input costs and we accept that. But for the volatility, if you don’t make 7.5% to 8% margins, you’re in trouble. In 2023 we burned over R2bn in a matter of six or seven months on avian flu and load-shedding – that’s money down the drain. The government just needs to create an enabling environment where we want to invest. We’re now thinking of spending more capital in Zambia than here. I’m not sure if this government of national unity is going to hold up, and then we’re in trouble.   

Is there a scenario in which a poultry company like Astral is ever not going to be a very cyclical business? Or is that just how it is? 

No. Seventy percent of the costs to produce a chicken come from feed and that depends on raw materials, stock levels and if there’s a war in the Ukraine and the Black Sea is blocked – you’re always going to have volatility in your raw material costs – and from droughts, or La Niña, or El Niño. But we can live with that. It’s the other things that are forced upon us, like service delivery failures and load-shedding and no railroads. The feed issue, I’ve managed for 40 years and you can explain that; that part of farming chicken is manageable. The margins should vary between 7% and 12% – not between 1% and 15%.  

I don’t know of other countries in the world that have the same problems as us. Those governments see poultry production and poultry protein as an essential business to their countries. It is the cheapest, best-cost meat protein in the world. And the future growth and consumption for poultry is really positive – which is why governments protect it because your carbon footprint on chicken is so much lower than the others. And then the genetic improvement is also something you should focus on. 

Why? 

Because we have continuous improvement in the selection of breeds of how much feed you need to grow 1kg of meat. If you want to be successful in this business you must first farm right – so you must have one of the best breeds, you must have your own breeding programme, and you must learn how to feed those birds. Look at Rainbow – for many years they farmed with the wrong birds and fed them wrong; that’s why they struggled. So optimise the genetic potential through nutrition.  

When I started off we used about 2.8kg of feed to produce 1kg of meat – it is now at 1.35kg of feed to rear 1kg of white meat. It’s done by a German company called Aviagen and they spend more on R&D than any other company I know of in the livestock business. It’s a family business and any profits they make they put back into R&D. 

So you get your breeding stock from them? 

We get the grand-grandparents from them, we farm with them, we produce grandparents, go through the same principle then you get a fertile egg and hatch it and you get parents – and the parents’ eggs become the broilers that we eat. So it’s a two-and-half year cycle to produce a broiler from its grand-grandparents. It’s a simple business when you eat the chicken, but complex to sit on this side.  

Over a 40-year career, and much of it under extreme duress, there must have been times you wanted to throw in the towel. Why didn’t you?  

I think farmers in general are eternal optimists; you always think it will go better next year. I was just fortunate to have a great team around me all the time. Some of the people have worked with me for 40 years, the incoming CEO [Gary Arnold] has worked with me for 28 years, and you can’t let people down. We’ve got 13,000 people in our workforce. And the industry itself also needs leaders. If there’s no leaders, the SAPAs and broiler boards would fall apart and that has happened in the past. I just never had the option to fail. You just do it over again, and try do it better. I’m leaving with no regrets, and I’ll still be involved for another year. So on Friday when I walk out with my fern and cardboard box, I will walk out with a smile. 

Top image: Astral CEO Chris Schutte. Picture: Supplied

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Giulietta Talevi

A prominent voice in print and broadcast financial journalism with a sharp edge in market and company news. Former Financial Mail Money editor and BusinessDayTV anchor, Giulietta boasts an influential digital footprint that commands industry respect.

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