This article was originally published in FairPlay’s 2023 annual report.
By Izaak Breitenbach, GM of SA Poultry’s Broiler Organisation
2023 has been the most challenging year in the South African Poultry Association’s century-old existence.
The year started with the escalation in the load shedding schedule, leading to losses growing from R2/kg to approximately R3/kg for every bird produced by integrated producers. Even higher losses were being reported among smaller farmers, with no means to recoup their substantial losses.
Many farms and farmers also fell victim to other municipal service delivery failures, hampering access to fresh, clean water; another challenge which has grown considerably worse since 2022.
During the latter half of 2023, the industry was laid low by the unprecedented bird flu outbreaks in the Western Cape, Gauteng, and surrounds. In line with the Animal Diseases Control Act of 1984, farmers have been culling and disposing of their infected flock, unfortunately with no compensation for culling these birds (despite the Animal Disease Control Act making provisions for farmers to be compensated for culling).
To date, the bird flu outbreaks has cost South African farmers an estimated R5 billion, and that tally will continue to rise as we head into 2024.
Among the myriad existential crises, the industry did enjoy a moment of respite in August, when Minister of Trade, Industry and Competition, Ebrahim Patel, implemented the long-awaited anti-dumping duties to defend the local industry against predatory trade practices.
An added glimmer of hope was gleaned from Deputy President Paul Mashatile’s address to the National Council of Provinces when he announced the formation of an emergency fund for South African farmers to recoup at least a portion of their bird flu losses.
Unfortunately, there have been no new developments on the establishment of this fund since the Deputy President’s address two months ago, and many South African farmers simply don’t have the capital to restock their farms.
When evaluating the industry’s actions in dealing with the avian influenza outbreak, it is evident that quick, focused action has mitigated the worst impact of the outbreak, getting several solutions in place to ease the effects on consumers, although the poultry industry is not out of peril yet: while the infection rate has peaked, we are still cataloguing one or two farms each week that are testing positive for avian influenza.
Our veterinarians and biosecurity experts continue to monitor the situation closely and are testing the surrounding wild bird populations to further contain the spread of the disease. The road to the poultry industry’s recovery is long and arduous. Commercial layers estimate that the recovery period could take 18 to 24 months.
The recovery window may be shortened if the domestic industry had the mechanisms or instruments to recover their costs for these considerable losses.
For instance, instead of draining the fiscus to offer importers a rebate (a blanket rebate on import duties favours foreign producers and provides importers with a generous cost advantage over local producers), perhaps it would make more sense to use the allocated rebate funds to restock – and in a few cases rebuild – South African poultry farms.
Another avenue for potentially recouping costs could be compensating farmers for culling infected flock in line with the Animal Disease Control Act. Deputy President Mashatile’s proposal of an emergency fund would also serve quite well to narrow the recovery window. Despite these challenges, the Poultry Association expects minimal (if any) shortages this festive season.
The supply shortfalls have been addressed by industry’s decisive actions, and hatching egg imports.
December is traditionally the month that experiences the highest demand for poultry products, while January is the month with the lowest demand. Pricing levels will reflect this.
Poultry prices are determined by retailers, not producers, however, these producers are reporting larger and larger losses to ensure they keep South African chicken the cheapest chicken Rands can buy.
