Chicken Industry

Fox among the Chickens

By Francois Baird

Has South Africa changed from being a nation proud of its ability to get things done into a nation of intimidated procrastinators? Is the country asleep or just afraid to act decisively while an enemy, yes, a modern-day enemy and pretender partner in BRICS, namely Brazil, is busy getting on with the relentless process of destroying one of this country’s critical agricultural industries – the poultry industry? Where are our political leaders when we need them to act decisively? Where are the defenders of our national interest when we are under attack?

With the national economy on the floor and unemployment through the roof, the least we can do is robustly, fearlessly protect our internationally recognised and highly competitive industry – the South African poultry industry, from the ravages of profiteering predators and importers.

Consider this. The poultry industry in South Africa employs 110 000 people directly, 20 000 indirectly in the grain industry and accounts for a long value chain that creates opportunities for small business and entrepreneurs throughout the country. This industry is critical to South Africa’s food security.

This is not just a phrase, a throwaway line to amplify an important point. It is a very serious fact and it follows as day does night that if this industry gets gobbled up by predators as happened in Ghana, Senegal and almost happened in Cameroon but for the brave and intelligent intervention of communities and government acting together, our industry will be destroyed. Not damaged – destroyed and taken over by the likes of Brazil and the EU who, with market domination, will have total control over chicken prices. A few rand cheaper to-day is no more than the bait for total price control tomorrow.

If Brazil is allowed to win this battle for South Africa’s poultry industry, one thing is certain: bang goes our food security and with it, bang goes an industry with the potential to employ the better part of 200 000 people, to transform into a healthy, dynamic reservoir of opportunity for black farmers in particular and entrepreneurs and small business owners up and down the country.

This is where our future lies. But first, we must defend what is ours. Achieve a steady state in the industry, position for growth and lift off into a brand-new future. We mustn’t let anyone take that away from us. Predatory trade is not just robbery of our future, it is the destruction of hope in the grimy interests of unjust profit for big Brazilian and EU businesses and a small group of South African importers. FairPlay says No Way!

But let’s be crystal clear about one thing. FairPlay is all for fair trade, for a level playing field where everyone competes to the same rules and must rise to meet the same challenges; but we are not afraid to be on the front line of the battle that must be fought against dumpers, market manipulators, greedy importers, job destroyers, community wreakers and crocodile predators.

This battle however, is not just about food security and the hugely significant employment numbers that the industry directly and indirectly accounts for, it is also very much about the estimated 1.3 million children, women and men who depend on the salaries of poultry workers for the simple sustainability of their daily lives. And it is that very sustainability that ensures stability in vulnerable communities.

It ensures that our elderly parents and relations are looked after, that our children are able to go to school, that shops are kept busy, transportation is paid for and on and on it goes. The destruction of the South African poultry industry would eliminate this essential social and economic stability and replace it with what? Nothing, absolutely nothing at all other than more expensive chicken, widespread poverty and the lack of means to access the most important source of protein in the country.

This must not be allowed to happen. It has got to be stopped dead in its tracks. And now.

Interesting and distressing to read recently that Astral, one of South Africa’s leading integrated poultry producers has just reported that its headline earnings per share in the six months to the end of the first quarter of this year fell by between 50% and 55% compared to last year. One of the factors is the failure of government to implement appropriate new tariffs on poultry.

Yes, of course there are other factors at play, such as rising maize costs and underinvestment by the state in infrastructural development to name two, but the most significant factor is undoubtedly the delay in imposing new tariffs of 82% on imported chicken.

“Are you mad?”, scream the defenders of Brazil and the importers – and tragically one of those voices is SANCU, the organisation that purports to protect consumer interests – “this would add 32% to the price of chicken.” Total rubbish, fake news, manipulative nonsense. The fact is that not one rand would be added to the price of locally produced chicken – that’s 70% of the market and it is well within the means of the importers to absorb the additional tariffs and still make a profit.

These are the facts:

SARS data shows that the average landed price of Brazilian leg quarters in January 2019 was R13.52 per kilogram, and when the existing 37% tariff is added it comes to R18.52. The average retail price of chicken in South Africa is around twice that – as an example, this week at Game leg quarters are sold at R37.80 per kilogram. That is 104% over the landed price.

If the 82% tariff were approved by ITAC, the landed price for Brazilian leg quarters will increase to R24.61 per kilogram, and if the price in Game stays the same at R37.80 per kilogram, as presumably it will, there will still be a fat markup by the importers. The bottom line is that an 82% anti-dumping tariff will have zero impact on the retail price of chicken and zero impact on the consumer. The only thing that might change that reality is importer greed for even more profits.

Perhaps, though, FairPlay has an important new ally emerging on the scene. The recent establishment of EBieSA (Emerging Black Importers and Exporters South Africa) may bring a new constructive dynamic to the concept of ensuring that fair play, the level playing field, becomes not just the guiding principle for imports and exports but becomes legislated for reality.

One thing is certain, in addition to more black importers, we need more black poultry farmers in a transformed poultry industry and throughout the value chain. This applies in equal measure to the transformation challenges that the Association of Meat Importers and Exporters (AMIE) must address as a matter of urgency.

Change is always a challenge. Nothing new about that. What needs to be new is the way that South Africa responds to the challenge. Together can be proudly South African, cohesive, intelligent, determined and progressive. Or we can let our enemies divide us and face the terrible consequences.

The poultry industry is working on the creation of a Masterplan in collaboration with the Department of Agriculture Forestry and Fisheries, the Department of Trade and Industry and other stakeholders. This will be more than a theoretical framework for the industry. It will become the strategic launching pad for this great industry into a new future wherein we are a nation of doers not procrastinators.