Chicken Industry

Government outlines plan to save SA’s poultry industry as imports cause jobs bloodbath

The state’s masterplan aims to contain imports and apply trade measures to protect the local industry from unfair trade and job losses. By Max Matavire.

A strong resolution from government is required if the country’s R48 billion poultry industry is to be revived to its former glory, and this must include the urgent implementation of harsher import tariffs.

Responding to the recent announcement by government of a poultry master plan – a blueprint for the industry that aims to contain imports and apply trade measures to protect the local industry from unfair trade – the SA Poultry Association (Sapa) says poultry is the second largest industry in agriculture in the country, and the biggest employer.

It is also globally competitive and goes up against the top six countries in the world in terms of the lowest cost per kilogram of chicken produced.

In an interview with City Press last week, Sapa’s general manager of the broiler organisation, Izaak Breitenbach, said: “The industry is almost 100 years old and grew year on year until 2009. Since 2009, imports have increased by 269% and industry growth has stopped, with production declining. Since 2009, almost 13 companies have closed down, resulting in job losses and a negative impact on the country’s GDP. Last year, the poultry industry was worth R48 billion.”

Breitenbach is urging government to move fast and protect the local industry.

The poultry master plan announced by President Cyril Ramaphosa at his Investment Summit in Johannesburg comes into effect immediately, and certain processes have already kicked in.

Breitenbach said: “We welcome the next steps and also extend our thanks to the many supporters of the industry, including FairPlay, Proudly SA, Cosatu, and the Food and Allied Workers Union for their meaningful input in the formulation of the master plan. A decision on the level of tariffs to be imposed on imports is expected to be announced soon by Trade, Industry and Competition Minister Ebrahim Patel.”

The poultry industry has now committed R1.5 billion towards meeting the plan’s objectives.

Sapa says broiler imports had increased by 73% over the past five years, causing a jobs bloodbath.

However, this will be reversed with the implementation of the masterplan as some of its objectives are to expand the local industry’s capacity and ensure that locally produced products make up an increasingly larger portion of consumption over time.

Breitenbach said that R6.5 billion worth of poultry imports entered the country last year, which is 566 000 tons – meaning a R6.5 billion revenue loss for South Africa.

The poultry industry employs more than 50 000 people directly, most of whom are in rural areas.

He said about 518 000 tons of poultry are dumped in the country each year.

“We are very happy that this master plan will put a stop to all this. It is a blueprint for the poultry industry, and it confirms that the local industry is a strategic asset for South Africa in terms of food security, jobs and food safety,” said Breitenbach.

The poultry industry has been facing problems, including the cost of feed, barriers to export and a trend of increasing imports.

FairPlay, a nonprofit organisation that advocates the end of predatory trade practices between countries so that big and small nations play by the same rules, and whose motto is Stop Dumping Now, said job seekers, trade unions and impoverished rural communities would be watching closely to see whether the master plan sets the industry on a growth path by cutting back on the devastating flow of dumped and predatory imports.

FairPlay founder Francois Baird said: “The plan aims to promote job creation in the chicken industry and its value chain, including maize and soya production. While FairPlay welcomes these developments, for which we have campaigned unrelentingly over the past three years, everything now depends on implementation.

“The key success will be the effectiveness of government measures to restrict imports, firstly through a tariff announcement, which is expected soon. The commitment of government’s intent will be shown by the percentage tariff it is prepared to impose to restrict Brazilian chicken imports.”

Baird said the promised crackdown on “unfair forms of trade” is another vital initiative that will deal with unacceptable trade practices, including practices that can compromise food safety such as thawing and refreezing, selling previously frozen imports as fresh chicken, and inadequate labelling, which could prevent effective traceability in the event of product contamination.

“Government will require additional resources for the effective implementation of existing and new regulations, and FairPlay hopes the import sector, as a signatory to the master plan, will play a constructive role in seeing this realised,” said Baird.

He said thousands of jobs had already been lost and many more were at risk because government’s efforts to stem the flood of imports had largely been ineffective.

He added that the relentless assault by foreign chicken producers, mainly in Brazil and the EU, had created an existential crisis in the local poultry industry, which is a strategic asset to South Africa.

“Had government been willing to enforce a real cut in imports instead of the relatively gentle curtailment that is forseen, jobs would have been preserved. Most of the jobs will not come from import replacement, but from expansion to meet growing local demand,” said Baird.

Lauding the master plan, FairPlay patron Judge Richard Goldstone said: “The poultry masterplan could well be a template for similar job-saving and job-creating industries. In a country with one of the highest unemployment rates in the world, nothing can be more important. It requires a steel will from government to implement what is necessary.”

The Master Plan:

The poultry industry master plan was announced by government last week at President Cyril Ramaphosa’s investment conference in Johannesburg. It is a creation of all relevant industry stakeholders – the government, farmers, processors, exporters, poultry importers and unions.

It is a blueprint of the local poultry industry which has been flooded by cheap poultry imports from Brazil and the EU.

It sets targets to be implemented by 2023 through the identification of five pillars instrumental in refocusing the poultry industry. These pillars are:

Setting up partnerships aimed at boosting production and feed availability and at the same time ensuring there is skills development; Driving domestic demand and affordability of local broiler products; Setting up safety and veterinary requirements within markets and giving opportunities to producers to export their chicken products; and Introducing measures aimed at enhancing a regulatory environment and ensuring compliance. This will make chicken products traceable and puts measures in place to ensure the industry as a whole complies with trade requirements; and

Protecting the local chicken industry by considering specific rather than ad valorem tariffs, simplifying trade systems, undertaking anti-dumping measures where appropriate and considering the introduction of import licences to support compliance.

Experts believe the plan will ensure that chicken, which has become a staple protein for millions of South Africans, will retain its place as the country’s favourite food.

More opportunities will be created for small-scale farmers to play a role in the sector, putting the poultry industry back on the growth path.

The master plan sets out a joint vision across the value chain and creates a Poultry Sector Master Plan Council to monitor and drive implementation.

This article was first published by the City Press on 11 November 2019.Access the original article here.