When government ministers assemble in Parliament, they will be met by a call to remove VAT from chicken and poultry feed.
When government ministers assemble in Parliament ahead of this year’s Budget speech, they will be met by a call to remove value added tax (VAT) from chicken, and a petition signed by thousands of people urging it to support small-scale poultry farmers by removing VAT from their chicken feed.
“We are taking this call direct to the ministers responsible – the Minister of Finance and the Minister of Agriculture,” said Francois Baird, founder of the FairPlay movement. “We will also deliver a copy to the Commissioner of the SA Revenue Service (SARS).
“They must act before it’s too late,” he said.
“The poultry industry is in crisis because of rising costs, poor infrastructure and poor delivery of services such as water and electricity. Small-scale farmers have been particularly hard hit, businesses are closing and jobs are being lost.
“Our hard-pressed consumers are going to be hit by further rises in food prices, including chicken, and household budgets will be stretched to breaking point.
“The one thing that can help everybody – farmers and consumers – is to remove VAT from chicken, dropping chicken prices by 15%. It is easily done, it’s affordable, and it’s urgent.
“We will provide the ministers with a detailed proposal on which chicken portions should be exempt from VAT – specifically those portions which are an essential part of the diet of low-income households.
“We will also present the Finance Minister with the petition started by a small-scale farmer calling on government to help other small-scale farmers by removing VAT from poultry feed. That petition currently has close to 5 000 signatures and we hope it will be more than that by the time budget day comes around,” Baird stated.
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Thousands small farmers are facing a crisis that threatens their livelihoods.
Ade Camngca is a small farmer with a lifelong passion for raising chickens, and a deep love for his community. He supported himself through university by selling poultry, and believes in the transformative power of small businesses like his.
But today, Ade and thousands of other small farmers, are facing a crisis. A crisis that threatens their livelihoods, our country’s food security, our rural economies, and the jobs of thousands of workers.
Earlier last year, Ade’s chicken farm in the rural Gauteng was thriving. He had just found new customers, forged new sales agreements, and had planned to double the size of his flock of layers, creating much-needed jobs in the process.
Over the course of last year, the war in Ukraine and global inflationary pressures contributed to skyrocketing global poultry feed prices. The rising cost of chicken feed – which comprises up to 70% of the cost of producing a chicken – began to take its toll.
Small farmers buy feed in small quantities from retailers, and Ade says that the cost of a 40kg bag of layer pellets increased from R320 at the start of 2022 to R410 by the end of the year. Layer mash, too, went up from R310 to R400 for a 40kg bag.
The future of Ade’s farm, and many others like it, hung in the balance. Ade knew he had to act. That’s why four months ago he launched a petition on change.org to urge the government to urgently drop VAT on poultry feed.
This would be a game-changer for small farmers like him.
“Yes, I’m a small farmer, but when I buy feed I can spend up to R18 000,” says Ade. “By removing 15% VAT from that cost, I can make a profit, make sure that my people are well paid, and save to scale up my operations.”
Ade’s petition has gained the support of almost 5,000 small poultry farmers and members of the public.
Ade’s business closed its doors
Unfortunately, by the end of last year, Ade could no longer sustain his enterprise. The high cost of feed made it unprofitable, and he could not afford to keep subsidising production costs from his own pocket, which he had been doing for months. He was forced to close his poultry farm and retrench his workers.
The harsh reality is that 85% of the farmers Ade has since spoken to are also planning to exit the industry this year. They blame sky-high feed costs, unreliable infrastructure and a lack of government support.
It’s not only small businesses feeling the pinch
The situation is dire, even for larger poultry producers like Astral Foods. Last week, SA’s largest poultry producer announced that it was making a loss of R2/kg for every chicken sold – showing the scale of the crisis even for integrated producers.
Chicken makes up 66% of all meat protein consumed locally and remains affordable and the most popular meat choice for consumers, despite rising costs.
Thousands of small poultry farmers across the country are hanging by a thread. Losing them would be a devastating blow to the country’s food security, to our rural economies, and to the tens of thousands of people employed in the sector, both formally and informally.
How can you take action and help small farmers like Ade?
Ade, and the FairPlay team, refuse to give up hope.
We will do everything we can to support those small poultry farmers who are still in business, and we would like to urge all South Africans to join us in signing Ade’s petition for the removal of VAT on poultry feed.
Please help us save our small poultry farmers and secure our food security. Sign the petition.
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South Africa’s daily power outages are wreaking havoc across the country’s agricultural sector.
South Africa’s daily power outages are wreaking havoc across the country’s agricultural sector, with multiple warnings that the lack of a reliable electricity supply is putting food security under threat.
The country’s struggling power utility, Eskom, has imposed cuts – known as loadshedding – every day this year, mostly totalling between six and eight hours a day (stages 2 to 4), but going up to 12 hours daily (stage 6) in a recent supply crisis.
The result is being felt in every part of agricultural production, from irrigation systems to sophisticated food production and processing. Food is being lost, wasted, spoiled or simply not produced.
The worsening energy crisis is the most serious issue facing agriculture at the moment, says Wandile Sihlobo, one of South Africa’s leading agricultural economists. He lists some of the areas most affected.
“In key field crops, roughly 20% of maize, 15% of soybean, 34% of sugarcane, and nearly half of the wheat production are produced under irrigation. Fruits and vegetables also heavily rely on irrigation and thus face similar challenges.
“In red meat, poultry, piggery, wool, and dairy production, there are also concerns that load shedding beyond stage two makes operations and planning challenging, as these industries all require continuous power for their usual activities.
“Similarly, agribusinesses in various downstream processing activities, such as milling, bakeries, abattoirs, wine processing, packaging, and animal vaccine production, face similar challenges.
Exporting agribusinesses, especially those with products highly sensitive to delays, such as fruits, red meat, and wine, are also worried about the port activities, which fortunately haven’t been primarily affected.”
There are concerns about job losses if agricultural businesses are severely affected.
“There are also food security concerns as the effect of load shedding will probably show in the volumes of products to be harvested/produced later in the coming months due to the time lag in agricultural production stages,” Sihlobo says.
As it is practically impossible to exempt the whole agricultural sector from the power cuts, Sihlobo suggests government could facilitate the investments in alternative power generation which many farmers are already making, by cutting red tape and offering incentives.
Sihlobo reports that a task team is being set up by the Department of Agriculture, and will include agricultural industry representatives, energy experts and government officials. They will explore near-term and long-term energy solutions for the agricultural sector.
“This is a specialised matter that needs swift and focused intervention,” he says.
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The sugar industry has warned that it could lose R723 million this year, affecting some 10 000 workers.
The sugar industry has warned that it could lose R723 million this year, affecting some 10 000 workers.
It said the losses would be “catastrophic” for the industry. It appealed to government to introduce short-term measures to mitigate the impact of load shedding on farmers, and to postpone any increase in the health promotion levy (sugar tax), which it has said has cost thousands of jobs.
“Load shedding affects 1,135 irrigated growers who employ more than 10,000 workers. An estimated 34% of South Africa’s sugar cane is produced in irrigated areas including Komatipoort and Malelane in Mpumalanga, and Pongola in KwaZulu-Natal”, the SA Canegrowers said in a statement.
Growers were also expected to incur more than R189 million in additional electricity costs, as load shedding forced them to irrigate during high tariff periods.
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Poultry producers, who supply 66% of the country’s meat, are under threat. This risks national food security.
South African poultry producers supply 66% of the country’s meat, so the threat to the industry from electricity shortages and other factors is a threat to national food security.
This is the basis on which FairPlay has urged a crisis meeting of poultry master plan signatories to safeguard the industry’s future, because the electricity crisis will take years to resolve and may worsen in the high-demand winter months ahead.
Hours of daily power cuts, known as loadshedding, meant that a modern and efficient industry, geared to 24 hour-production, now faced a perfect storm, FairPlay founder Francois Baird said in a statement.
“Chicken production is vital for South Africa’s food security,” he said. “Chicken is produced in vast and affordable quantities, and is by far the country’s most popular meat protein, particularly for low income households. Yet load shedding has compounded the industry’s burdens of dumping, poor infrastructure and municipal service delivery.”
Baird said the crisis affected the whole poultry value chain. Poultry producers had to invest millions in producing their own electricity because Eskom, the national utility, could not keep the lights on in the chicken houses.
“Small poultry farmers without the means to provide alternative energy, are in dire straits. Maize and soya farmers who feed the chickens, cannot irrigate their crops. A poultry feed shortage may loom next year, further escalating input and consumer prices for chicken.”
FairPlay called for urgent intervention by the two ministers responsible for the poultry master plan – Agriculture Minister Thoko Didiza and Trade, Industry and Competition minister Ebrahim Patel.
“Together, the poultry industry and the government need to draw up a plan to ensure that the industry and its jobs are protected, and that the vital supplies of affordable chicken to the nation are able to continue. The plan should help pay for the support by re-instituting dumping duties immediately and scrapping VAT on local chicken and chicken feed.”
The poultry industry is technologically advanced and internationally competitive, and will be able to fulfil its role in underpinning South Africa’s food security. Yet it is under threat from circumstances outside its control.
“South Africa’s poultry industry and its value chain should be declared a key pillar of food security and accorded national prioritisation to minimise disruptions to its ability to feed the nation,” Baird said.
Listen as FairPlay founder Francois Baird talks about food security on Power Business:
FairPlay has urged government to pay attention to the plight of small-scale poultry farmers.
In a statement, FairPlay has urged the government to pay particular attention to the plight of small-scale poultry farmers, a critical component of the country’s food security and job creation.
“Small-scale poultry farmers, lacking the financial resources of the big commercial producers, have been hit hard in recent years – first by Covid-19 disruptions, then by fertiliser, fuel and feed increases due to the war in Ukraine and most recently by persistent loadshedding that disrupts production. Big and small producers are also being hit hard by the degradation of transport infrastructure, hampering delivery of agriculture inputs and outputs.”
Baird said small-scale farmers were being hammered by constant power outages, and a planned electricity price hike might finish them off. Many would go out of business, and jobs and skills – and access to affordable protein for poor people in rural South Africa – would be lost.
“The country’s two agricultural master plans – promoting the agricultural and agro-processing sector and the poultry industry – both focus on expansion and job creation, particularly at small farmer level. Both plans should be revisited urgently, and revised to enable small-scale farmers to survive the next few years.”
Baird pointed out that unlike farmers elsewhere in the world, South African farmers received no subsidies, and poultry farmers were not even compensated for chickens culled because of bird flu outbreaks.
“A scheme aimed at keeping small-scale famers in business over the next few years, compensating them in particular for losses due to load-shedding, would yield great benefits in the future. A range of other incentives can also be considered such as tax rebates, exempting feed input costs from VAT and similar initiatives. Poor consumers would benefit from VAT free local chicken.”
The food security threat, coupled with plight of small-scale farmers, needed urgent attention at top levels of government, from President Ramaphosa down.
“Only urgent action on keeping agriculture going, and in particular the survival of poor consumers, small farmers and their employees, can help avoid a food security collapse,” Baird stated.
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