How Daybreak’s chickens came home to roost

On Thursday, 8 May, the Department of Employment and Labour visited Daybreak Foods after its 4 May statement that “The department … has noted with concern recent media reports indicating that Daybreak Foods … is facing significant operational, financial, and reputational challenges.”

Read more: Inside Daybreak — hunger, silence, bullets and betrayal at Delmas chicken farms

Daybreak Farms, which is based near Delmas, Mpumalanga, grows and slaughters more than a million birds a week.

While the department’s presence signalled a step toward addressing the crisis, a whistle-blower employee who was on the ground told Daily Maverick there was a disconnect: “The inspector has arrived, but there’s a language barrier. He doesn’t understand us and hasn’t given us any advice. All he talks about is saving the business; (he is) not addressing our concerns as workers.”

Department intervenes

Around 6pm last night, Daily Maverick was reliably informed that the Department of Labour had requested employees to bring their identity documents in on Friday morning so the department could assist them in claiming benefits under the Unemployment Insurance Act, under the temporary layoff/reduced work time benefit.

Daily Maverick has a copy of a letter addressed to the workers from the department, stating that if Daybreak Foods refuses to provide the necessary UI-19 forms or complete the employer section of the UI-2.7 form, the labour centre can:

• Verify their employment and contributions using UIF records;


• Issue a compliance order to Daybreak Foods to submit the necessary documentation; and


• Investigate the company for non-compliance, which could lead to fines or prosecution.

The letter explains that UIF benefits for reduced work time are calculated based on the difference between normal earnings and what you are currently earning (in this case, zero, as workers are not being paid). The benefit is typically 38% to 60% of your average salary over the past six months, depending on your income and UIF credits. Benefits are payable for the period of the layoff, up to a maximum of eight months, provided the workers remain employed, but unpaid.

The waiting game

Daily Maverick found the last group of Daybreak Foods protesters waiting for their transport home yesterday afternoon – after the Department of Labour had engaged with them, promising to mediate by speaking to the company’s owners. The workers said that the company was expected to remain closed for six months.

Their primary demand remains immediate access to their UIF documents and outstanding wages. Frustrated workers told Daily Maverick that Rainbow and Early Bird had reportedly made offers to buy into Daybreak Foods in an effort to save the company, but these offers had been refused by the management.

Now, the workers await a response from their management after the labour department’s promised discussions, holding on to hope for clarity and resolution amid ongoing uncertainty.

Daybreak Foods has released a media statement acknowledging “significant financial constraints currently affecting its operations”. The board said it was exploring options to place the company into business rescue and required shareholder participation and buy-in.

“Currently, Daybreak Foods awaits a response from the PIC regarding the funding request and cannot commit to a specific date for employee salary payments. However, employee salaries remain a top priority for the company,” the media statement said.

The PIC noted earlier this week that it was engaging with its clients, the board of Daybreak and other stakeholders “on an urgent basis” to find a solution aimed at preserving the value of assets and, importantly, jobs in the company.

“Daybreak’s immediate requirements include short-term working capital, the need to strengthen its board and management team, and implementing a credible and realistic turnaround strategy. Any intervention must also address longstanding governance and management concerns at the company,” the PIC said.

The writing was on the wall

Analyst Anthony Clark of SmallTalkDaily Research said, “Daybreak has been the festering boil on the bums of the chicken sector with its actions to try and desperately stay solvent in the absence of further PIC support, causing mayhem in the marketplace and kg realisation pricing. Its one-million bird per week production – dumped – on the market, aided (some) but caused consternation to more respectable market players.”

In a research note mailed on Thursday afternoon, reflecting on the company’s downfall, Clark said he became aware in mid-to-late 2024 that Daybreak was unable to pay suppliers for animal feed, with one supplier attempting via court action to have the company liquidated.

“The writing was on the wall that blood was about to be splashed on the abattoir wall,” Clark said. He said Daybreak had asked the PIC backers for another R250-million of funds as working capital back in November 2024, “but the PIC dragged its feet”.

“I was informed that a large retailer had extended terms to Daybreak over the festive period (the sum whispered was R100-million) to allow the flailing company to continue its production as Daybreak had been selling product into the market at low prices – an aid to said retailer – just to generate cash flow.”

However, even that was unsustainable in selling below production cost. Then again, some months ago, Clark was informed that management, who had joined from Rainbow a couple of years ago, were exiting the business. CEO Richard Manzini, who had been tasked with turning around the state-owned poultry enterprise, threw in the towel on 11 March this year along with other senior management.

Where it all went wrong

Clark maintains the seeds of Daybreak’s demise were planted when agricultural business Afgri (a name from the past) bought Daybreak in 2005 for R110-million, then sold it to a PIC-backed BEE consortium in 2015. Clark says that although no price was ever disclosed, Daybreak’s mounting losses and need for cash bailouts from the PIC have been well documented.

By late 2024, the company had failed to repay R42-million owed to its largest contract grower and defaulted on a R100-million emergency loan.

The departure of Manzini and other top management in March this year triggered an operational collapse: feed deliveries stopped, contracts fell through and both workers and livestock were left stranded.

Attempts to corporatise the business and respond to shifting consumer preferences – from frozen to fresh poultry – were undermined by rising feed costs, avian influenza outbreaks and delayed PIC funding. DM