Chicken dumping is becoming a national crisis. Between 4 000 and 5 000 jobs in the industry have been lost, and 110 000 more are at risk, plus 20 000 in the feed supply sector.
Chicken Dumping will destroy the SA chicken industry, not because the industry cannot compete, but because it is being killed by dumping, a practice which has been outlawed by the World Trade Organisation (WTO).
What is chicken dumping?
Other countries are dumping large quantities of surplus chicken in the South African market at prices that are far below their production costs.
So why is this a problem?
- Because thousands of jobs have already been lost in a country with one of the highest unemployment rates in the world.
- In reality this affects many more people as each worker may support as many as 10 people.
- The South African Poultry Association (Sapa) warned four years ago, that 20 000 jobs could be lost if imports of cheap chicken continued.
- Since then the volume of dumped chicken has increased.
Warning: The entire South African chicken industry may collapse before the end of 2017
RCL Foods, one of SA’s largest chicken producers, has warned that the dumping could cause the entire South African chicken industry to collapse before the end of 2017.
Last month RCL laid off 1 350 employees – 20 percent of its workforce – and is selling 15 of its 25 farms.
Why is there a chicken surplus in some countries?
Chicken breasts and wings are currently the preferred parts of the chicken in North America and Europe. These so called “premium cuts” can be sold there at a price high enough to cover the production cost of the entire chicken. The drumsticks and thighs, which are classified as waste, are then sold below cost to SA, undermining local producers. In fact they are sold in any market that will take them for any price the exporters can get.
Dumping is against the rules of the WTO
Selling below the cost of production is the trade definition of dumping and against the rules of the WTO.
As local producers cannot compete with dumped chicken at artificially low prices, they are left with no option but to cut jobs and close their doors.
SA one of few countries allowing dumping
SA is targeted by exporters, particularly those in Europe and South America because it is one of the few countries that allows virtually unrestricted chicken imports.
Russia closed its doors to EU imports in 2014 and China raised tariffs and health barriers to restrict imports.
As African countries were targeted, many implemented measures to protect their local industries. In Ghana the local chicken industry has collapsed as they did not implement protective measures.
This is not about SA’s inefficiency
SA’s chicken industry is the fifth most efficient in the world, with production costs well below those in Europe.
SA chicken exports blocked
- Many countries block SA exports for a variety of reasons.
- South American countries say our abattoirs are not good enough. To have our abattoirs approved is a lengthy process which will require years of certification.
- The US and Europe use ostriches with bird flu as an excuse to block SA exports even though our chicken industry has never had avian flu.
SA needs to act quickly and implement the measures demanded by other countries if the country’s chicken industry is to survive. These include phytosanitary measures, health checks and abattoir certification.
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This article was first published on www.georgeherald.com on 20 February 2017