Bad to worse for one of South Africa’s most important food producers

Government-owned poultry producer Daybreak Foods, which employs thousands of workers, faces liquidation due to an unsuccessful bid to raise cash to stave off creditors. 

According to a Sunday Times report, the state-owned poultry producer, responsible for about 7% of the country’s poultry supply, has failed in its latest attempt to secure urgent funding to avoid collapse.

The Public Investment Corporation (PIC), which owns Daybreak Foods, has urgently appealed to its clients—the Unemployment Insurance Fund (UIF) and the Compensation Fund (CF)—for financial assistance. 

A letter seen by the Sunday Times revealed that the PIC requested R500 million to settle mounting creditor claims, including a pending liquidation application brought by three creditors, one of which is Lakat Chicken. 

Legal counsel has reportedly advised that the chances of successfully opposing the liquidation are slim, warning that continued resistance would be meaningless.

The situation escalated when Lakat Chicken was granted a provisional liquidation order, with a final court date looming. 

The PIC’s chief investment officer, Kabelo Rikhotso, wrote in the letter that the funding would “decisively alter” Daybreak’s dire financial outlook. 

Despite the urgency, the requested funding had not been approved by the end of the business day on Friday. 

Sources cited by the Sunday Times said funders were unconvinced that pouring more money into Daybreak was a sound financial decision.

Daybreak has already received R250 million from the Government Employees Pension Fund (GEPF), which holds a third of the company through the PIC. 

The other two-thirds are owned by the UIF and CF, making Daybreak fully state-owned. The PIC acquired the company in 2015 for R1.2 billion.

This was with high hopes of transforming one of South Africa’s least-transformed sectors, boosting food security, creating jobs, and uplifting rural communities. Nearly a decade later, however, those goals remain unmet.

Now, with creditors circling and confidence in the company’s future dwindling, 3,400 jobs, including those of farmworkers and contract growers, are at risk.

The PIC said it continues to engage with its clients, Daybreak’s board, and other stakeholders and promised to share further developments once decisions have been finalised.

Calls for PIC conduct to be investigated

The financial difficulties at Daybreak Foods are not new, but political parties and unions now want answers due to the jobs at risk and the public funds spent to keep the producer afloat. 

This includes the DA, which has requested that the Financial Sector Conduct Authority (FSCA) investigate the PIC’s failings.

Two years after the PIC acquired the company for R1.2 billion, a CEO seconded by the PIC described it as “technically insolvent” and warned that the purchase price was likely vastly inflated. 

Despite these early red flags, the PIC continued to pour in financial support, even as internal mismanagement, boardroom tensions, and poor oversight continued.

In 2023, a new CEO, Richard Manzini, introduced a turnaround strategy aimed at restoring operational stability. 

The PIC approved a R250 million funding facility to upgrade infrastructure and reinforce financial controls. By early 2025, only R176 million had been disbursed, which was too late to prevent the unravelling. 

Manzini and several senior executives resigned in protest, and by April, the situation had spiralled, with salaries going unpaid, feed deliveries stopped, and thousands of chickens dying from starvation.

In response, the DA has labelled the situation a “collapse of accountability, governance, and basic decency.” 

In addition to demanding an FSCA probe, the party has submitted an Application for Promotion of Access to Information Act (PAIA).

The party said this would compel National Treasury to disclose what actions have been taken to implement recommendations from the Judicial Commission of Inquiry into the PIC. 

The DA explained that the commission had previously flagged Daybreak’s acquisition as potentially irregular, noting that the PIC’s stake exceeded the 30% investment limit.

“We support public investments that uplift communities, protect workers, and grow the economy,” the DA said. 

“However, we will not stand by while public funds are wasted, employees are mistreated, and animals suffer.”

The Congress of South African Trade Unions (Cosatu) and its affiliate, the Southern African Clothing and Textile Workers Union (Sactwu), which represents Daybreak employees, have echoed these concerns. 

In a statement, Cosatu said it was deeply disturbed by the escalating crisis and called on the Department of Employment and Labour to intervene alongside the PIC to find a solution that prioritises workers.