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The South African poultry industry is confident that VAT-free chicken would benefit low income households rather than affluent consumers, and believes the savings will be passed on by producers and retailers.

These assurances came from Izaak Breitenbach of the SA Poultry Association (SAPA), which is finalising its application to have the 15% value added tax (VAT) removed from some chicken products.

He told Farmer’s Weekly that the VAT exemption would aid food security, as it would make chicken more affordable for low-income groups, resulting in a meaningful increase in consumption.

“We are not asking for chicken cuts consumed by higher-income groups to be exempt – only bone-in frozen chicken and secondary products like livers and hearts,” he said.

Breitenbach said concerns that led to the proposal being turned down in 2018 had been addressed this time around. This included a definition of the exempt products that would not cause ambiguity. 

“The concern then was also that it would reduce income for the fiscus. While this will still be the case, the fact that only certain cuts will be exempt will make the impact smaller.”

Whether retailers will respond to the VAT exemption by passing discounts onto consumers remains to be seen, but Breitenbach said he was confident that consumers would reap the benefits. 

“Chicken is very price sensitive, with retailers all vying for consumer attention. We believe the full 15% reduction will be passed on to consumers,” he said. 

SAPA believed that the VAT exemption would also increase demand for these chicken products, which boded well for chicken farmers and others in this value chain.

The Treasury is expected to make a decision on SAPA’s request by February 2025, Farmer’s Weekly reported.

Chicken is an essential source of meat protein for South Africa’s low-income households, and VAT-free chicken is needed as an additional measure to keep prices down.

This is the thrust of an article by FairPlay founder Francois Baird, published in Food for Mzansi.

“The South African poultry industry’s objective is to produce high-quality chicken at the lowest possible cost of production for all South Africans. It has done so for decades and the popularity of chicken shows that this business model is a success,” Baird wrote.

“Chicken feeds the nation – it makes up 66% of the meat consumed in the country, and affordability is a key factor. It accounts for most of the meat protein in the diets of low-income households.”

Money is tight, choices have to be made and consumers were switching to lower-priced food items, Baird said. This included canned pilchards which are exempt from value-added tax (VAT) while chicken is not.

“As the primary source of meat protein, chicken is vital for the country’s health. This is particularly so for low-income households and the shamefully high number of malnourished children in a relatively wealthy country. Just under 30% of all children under five are stunted, the result of chronic malnutrition and lack of access to protein, as this affects them for the rest of their lives.”

According to the United States department of agriculture, chicken contains multiple vitamins, including B3, B6, and B12, as well as essential minerals and micronutrients. These contribute to the health of children, students and workers – the learning and earning on which economic growth depends.

“Chicken should therefore be produced as cost-effectively as possible to ensure it remains as popular as possible. That is the aim of the SA poultry industry, which can bring the price down further if the government removes the 15% value-added tax (VAT) from the chicken products most consumed by low-income households.

“VAT-free chicken is a pro-poor proposal. It is also a pro-nutrition, pro-health and pro-jobs proposal,” Baird concluded.

The South African poultry industry’s recovery from last year’s devastating losses is illustrated by the return to profitability of Astral Foods, the country’s largest poultry producer.

Increased revenue, greater efficiencies and lower costs produced profit before interest and tax of R1.1 billion, up 281%, Astral said in a results presentation for the financial year to September 2024. The company is now debt free.

Astral recorded its first ever annual loss a year ago, when the poultry industry was hit by power outages, high feed and other input costs, and the country’s worst outbreak of bird flu.

While there have been improvements all round, and the outlook for 2025 is encouraging, bird flu is still a huge threat, Astral said.

“Bird flu remains a major risk to the local poultry industry, with slow progress towards approval for the vaccination of broiler breeding stock,” said outgoing CEO Chris Schutte.

Astral also noted continuing high levels of poultry imports, with imports taking a greater share of the South African market than any local producer.

Imports had 23% of the local market, Astral estimated, compared to 20% for Astral, 17% for Rainbow and 8% for Country Bird.

Gary Arnold will succeed the long-serving Chris Schutte as CEO of Astral Foods, South Africa’s largest poultry producer.

In a stock exchange announcement, the company said Arnold would take over from Schutte, who steps down at the end of January next year. Schutte, the doyen of the South African poultry industry, has reached Astral’s mandatory retirement age.

Theuns Eloff, chair of Astral’s board, said there had been “a robust replacement process” to determine Schutte’s successor.

“Mr Arnold is currently serving as the Group’s Chief Operating Officer, as well as an Executive Director since 2012, and has worked alongside Mr Schutte for many years. 

“Mr Arnold has been an integral part of Astral for the past 28 years. He has extensive experience and an in-depth understanding of our integrated business model and has been integral in executing the Group’s strategy. 

“The Board would like to wish Mr Arnold all the best in his new position. The Board is confident that, under his leadership, Astral will continue to build on maintaining its position as South Africa’s leading integrated poultry producer,” the statement said.

South Africa’s unemployment rate dropped slightly in the third quarter of this year, but millions of people, particularly young aspirant workers, remain without a job.

StatsSA reported that the official unemployment rate was down to 32.1%, an improvement of 1.4 percentage points on the second quarter. The expanded rate, which includes those who have given up looking for jobs, improved to 41.9% from 42.6%.

The slightly better numbers are welcome, but not a cause for celebration. More than 12 million people have no work, and millions of families have no income and no food provider.

Worse, unemployment is highest in the younger age groups, and the numbers increased in the third quarter. Unemployment in the 15-24 age group is put at 60.2%, while in the 25-34 age group it is 40.4%.

Black Africans are the hardest hit population group, with unemployment at 36.1% – more than a third of black Africans of working age are without a job. 

“Black African unemployment rate has consistently been higher than the national average and other population groups over the past 10-year period,” StatsSA said.

Bird flu has probably hit Marion Island, threatening almost half of the world’s wandering albatrosses, the South African government has reported. At the same time, bird flu outbreaks in Europe are increasing as the northern winter approaches.

Marion Island is one of the two uninhabited Prince Edward Islands in the southern Indian Ocean, about 2 000 kms southeast of Cape Town. Both are home to large sea bird colonies.

Bird flu is suspected to have reached Marion Island and is possibly responsible for deaths in three breeding seabird species, the Department of Forestry, Fisheries and the Environment said in a cautious statement.

It said the H5N1 strain of highly pathogenic avian influenza (HPAI) had spread across the globe since 2021, and had reached Antarctica in February this year.

“The virus can be transported long distances by migrating birds, and this is likely how the virus arrived on Marion Island,” the statement said.

“The Prince Edward Islands, comprising Marion Island and Prince Edward Island, are breeding and moulting sites for millions of seabirds, including almost half of the world’s Wandering Albatrosses and hundreds of thousands of penguins, and are home to large numbers of Southern Elephant Seals and Sub-Antarctic and Antarctic Fur Seals.

“The situation is being closely monitored by the 11 field personnel overwintering on the island, who have been trained to recognise possible HPAI signs in birds and seals.”

There have so far been only a few noted mortalities on Marion Island – a brown skua, two southern giant petrels and three albatross chicks. However, the virus has killed thousands of sea birds and marine mammals in multiple countries.

Europe prepares for a bird flu winter

Bird flu outbreaks in Europe are increasing as the northern winter approaches.

New outbreaks are happening “all over Europe”, Poultry World reported.

It said there had been outbreaks in Austria, France (including on two farms with vaccinated ducks), Germany, the United Kingdom and Hungary, which reported 30 outbreaks in a single week.

Authorities across Europe were warning that the bird flu risk was increasing rapidly, the publication said.