Rapidly rising agricultural costs, including unreliable and increasingly expensive electricity, and the likelihood of chicken price increases as a result, make the removal of South Africa’s 15% value added tax (VAT) from chicken portions ever more necessary.
FairPlay has spearheaded the “VAT-free chicken” campaign since 2018. We have renewed the call with vigour after the Ukraine war forced up chicken prices globally by increasing the cost of fertiliser, fuel and the feed which makes up 70% of a poultry farmer’s input costs.
FairPlay founder Francois Baird has pointed out that the chicken industry supplies 66% of South Africa’s meat, and that chicken is popular and affordable throughout the country. This, he said, makes it a strategic national industry, worthy of government support.
“The chicken industry is the backbone of food security in South Africa,” he said. “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.”
Yet the chicken industry faced what he called “a perfect storm”, threatened not only by predatory imports but by rising input costs, poor rural infrastructure and daily power cuts, with a substantial electricity price increase likely this year.
Consumers, in turn, faced rising prices as producers sought to recover much higher input costs. Astral, country’s largest poultry producer, has said that current production costs are R2 per chicken higher than selling prices. The SA Poultry Association (SAPA) estimates that load shedding alone adds R0.75/kg to the cost of producing a chicken.
Baird said the crisis facing the chicken industry required an emergency meeting of government and industry leaders, and an emergency plan that should include the removal of VAT from the chicken portions on which lower-income households relied for their meat protein.
Astral CEO Chris Schutte has strongly supported the call for vat-free chicken. “I think if the government is concerned about the majority of people and the food security of South Africa, it will as a matter of urgency, review the zero-rated basket and include chicken to relieve pressure on consumers,” he said in an interviewwith the Sunday Times.
Support also came this week from the national business newspaper Business Day, which said, in an editorial, that removing VAT from chicken would benefit farmers and consumers. It said the revenue lost from zero-rating chicken was “a small price to pay to help chicken farmers keep the doors to the national coop open and allow poor households to stretch food budgets further”.