Chicken Industry

Are chicken importers making fat profits? Parliament and the CompCom should take a look

Dumped chicken imports come in at extremely low prices, but that doesn’t result in cheap chicken in South Africa’s retail stores. Instead, those cheap imports end up selling for the same price as locally produced chicken.

So why don’t consumers benefit? The Competition Commission, and Parliament, could find out.

Dumped chicken is cheap because it consists of bulk packs of frozen bone-in portions such as leg quarters which for companies in Brazil, the United States and the European Union is unwanted surplus. They have made their money from premium-priced breast meat and sell off the brown meat for whatever they can get.

Because of this, dumped chicken can be imported for half the price or less of local chicken. And if it sells at roughly the same prices in the stores, then money is being made somewhere along the line.

FairPlay has maintained for years that chicken importers could be making “fat profits” by buying low and selling high, to the detriment especially of the low-income households for whom chicken is the most affordable meat protein.

We have repeatedly challenged importers to deny the allegation and, even better, to disprove it. Not one response from an industry composed of private companies who prefer to keep their profits private, however fat those profits might be.

Two bodies have the power to open importers’ closed books. One is the Competition Commission, which is investigating food price inflation and producer and retail profits in the food industry, including chicken. They have not looked at chicken importers, and that is a serious omission.

The other body is Parliament, which also has extensive powers including the ability to subpoena people to public committee meetings. The portfolio committee on trade and industry could require the CEOs of meat importing companies to appear in person, bringing with them years of audited financial statements.

The portfolio committee could specify that it wants details of the purchases and sales of imported poultry, separate from the other meats or products in which importers are trading.

The executive committee of the Association of Meat Importers and Exporters (AMIE) comprise executives from the biggest meat importing companies. That would be a good place to start.

Best of all, parliamentary hearings are public and reported on by the media. 

The country’s two biggest chicken producers, Astral Foods and RCL Foods, which own Rainbow, are listed companies. Every six months the public gets to see their financial statements and the profits and losses of their chicken businesses.

The same should apply to chicken importers, because they are trading in a staple food whose prices are critical to millions of poor people. If undue profits are being made, to the detriment of consumers, this should be exposed.

And if importers are operating on razor-thin margins, or making losses like some chicken producers in those challenging times, then we will know there is no exploitation and that they really do have consumer interests at heart.