This article is part of our 2022 Annual Report, which includes a FairPlay year in review, a 2023 forecast by the South African Poultry Association, an assessment of the state of infrastructure in South Africa by Donald MacKay and a profile on poultry farmer, Clive Tigere, and his new hatchery in Makhado.
This has been FairPlay’s sixth year of fighting against predatory trade such as dumping, and fighting for the people and communities affected by the job losses that dumping causes.
We kept the pressure on throughout the year, highlighting issues in media articles and letters, in comments on social media, and in our weekly FairPlay Bulletin.
We wrote letters to the Finance Minister, on possible losses to the fiscus relating to Australian chicken imports, and to the Ministers of Agriculture and of Trade and Industry, as well as to provincial premiers, regarding delays in implementing the poultry master plan and the impact on economic growth and job creation.
As food inflation rose steadily throughout the year, FairPlay repeatedly urged the removal of value added tax (VAT) from targeted chicken portions, and from feed supplied to small- scale farmers, in order to ease some the burden on the poor.
From a FairPlay standpoint, the two most important developments were the government’s controversial decision to approve, but to delay for 12 months, the implementation of anti-dumping duties against Brazil and four European Union countries, and our year-end Digital Summit, in conjunction with Farmer’s Weekly, on the successes and failures of the poultry master plan.
Anti-dumping duties deferred
In July, Trade, Industry and Competition minister Ebrahim Patel agreed that anti-dumping duties were warranted against Brazil, Denmark, Ireland, Poland and Spain. He accepted the findings of South Africa’s trade regulator, ITAC, that the five countries had been dumping chicken at prices that harmed South African poultry producers.
Then, to the surprise and disappointment of the local poultry industry, Minister Patel announced that anti-dumping duties would be implemented against those five countries, but not until August 2023. The reason given was that the duties could contribute to rapidly rising food price inflation, which might abate before next August.
FairPlay responded forcefully. We said that Minister Patel was inviting accelerated dumped chicken imports for the next year, and that his decision was contrary to the undertaking in the poultry master plan that the government would “act decisively” against dumping.
We argued that Minister Patel’s controversial decision would not only undermine trust that the government would stick to its commitments in the poultry master plan, but it would lessen the confidence in these commitments in other industry master plans.
FairPlay called for the immediate imposition of the anti-dumping duties that Minister Patel had agreed were justified and necessary.
Digital Summit on the master plan
The delayed anti-dumping duties also came up during our Digital Summit on the poultry master plan and featured in the action plans that FairPlay recommended after the online discussion.
FairPlay founder François Baird expressed disappointment that Minister Patel and Agriculture Minister Thoko Didiza had not joined the discussion. Nor had the CEO of the Association of Meat Importers and Exporters, even though all three were invited.
Baird said participants would have welcomed the input of the two ministers. They could have given their views on the status of the master plan, and explained what the government was doing to address inefficiencies and speed up implementation.
The webinar highlighted master plan successes,including a R1.5 billion investment by the South African poultry industry which has boosted capacity by 10% and created more than 1 300 jobs so far. There will be further investments next year.
Some master plan projects are way behind schedule. They include the export drive, intended to double South Africa’s chicken exports, and then redouble and keep increasing them in years to come. It will not only create local jobs at poultry producers, but it is a potential bonanza for chicken exporters.
The reasons for the delays seem to be centred on the Departments of Agriculture and of Trade and Industry, and their two ministers who signed the master plan back in 2019. Following our Digital Summit, we have sent both ministers the list of action plans FairPlay drew up after that discussion.
We will follow up with them next year, because that is our theme for 2023 – get the poultry master plan back on track.
Urgent action needed to fix the poultry master plan
The actions needed to get the poultry master plan back up to full speed are varied, but all are urgent because many parts of the plan are months and even years behind schedule.
Those identified by FairPlay from the discussions at our Digital Summit include:
1. Get the master plan back on track
The poultry master plan is way behind schedule. Signatories need to identify priority areas where most can be achieved in the shortest time.
The first action must be to reconvene the Executive Oversight Committee (formerly the Master Plan Council). It includes the two ministers, poultry producers, chicken importers and exporters, and trade unions.
They need to assess the situation, decide on priorities and assign responsibilities and deadlines to the various master plan signatories.
All measures should be undertaken as a matter of urgency and publicly communicated in a timely fashion.
2. Signatories need to recommit to the master plan, and communicate more efficiently with each other on implementation.
For much of the past year, there has been a lack of communication between the government and other master plan signatories, and an apparent lack of enthusiasm for the plan by the government and by the Association of Meat Importers and Exporters (AMIE).
All signatories need to recommit to the master plan and its objectives. Ministers Patel and Didiza need to communicate more effectively, and more regularly, on master plan implementation, at
the Executive Oversight Committee and in public.
3. Implement anti-dumping duties against Brazil and others
Minister Patel’s suspension until August 2023 of anti-dumping duties against Brazil and four EU countries is harming the local poultry industry, from large producers to small-scale farmers.
It has also reduced confidence in the government’s commitment to master plan objectives.
The master plan committed the government to “act decisively” against dumping. Minister Patel needs to discuss this with industry leaders, and implement the anti-dumping duties as a matter of urgency.
4. Get exports going
The export drive has not happened. The poultry industry has created additional capacity in anticipation of increased exports, and some of that capacity is now lying idle.
Master plan signatories need to appoint a special task team to bring an urgent focus on exports. Action must include addressing the state veterinary capacity and other requirements for the export of cooked and partially cooked meat, and the export of raw chicken breasts to the EU, where they will command premium prices.
Exports are a strategic necessity for the poultry industry, particularly in the light of expanded production capacity.
5. Restructure chicken import tariffs
Minister Patel asked for, and received from South Africa’s trade regulator ITAC, a report on the restructuring of chicken import tariffs as proposed in the poultry master plan. He has said nothing about the report and its recommendations.
Minister Patel is requested to announce, as a matter of urgency, which of ITAC’s
recommendations he will accept and implement. Revised measures, and particularly setting a reference or floor price for chicken imports, will combat under-declaring the value of imports, and declaring product under a lower tariff heading. These practices are illegal.
6. Implement VAT-free chicken
Remove VAT from specific chicken portions to help consumers, and remove VAT from chicken feed for small-scale farmers.
There is no VAT-free meat in the zero-rated food basket, yet chicken is the most consumed protein by all South Africans, including poor households. Zero-rating these products
is urgent, and would benefit lower-income households and small-scale farmers.
7. Help small-scale farmers
Small-scale farmers are struggling to survive because of rising input costs, and feel they have received no benefits from the master plan.
The poultry industry should engage with Ministers Patel and Didiza, and with the Food and Allied Workers Union (FAWU), to encourage direct support for small-scale farmers, including the services of agricultural extension officers.
8. Fix infrastructure
Failing infrastructure – electricity, water, roads and rail – is hampering poultry production, adding to costs and could make exports uncompetitive.
State infrastructure requires urgent attention. This is an issue for all master plan signatories, and should be the subject of a note from them to President Ramaphosa and the Cabinet.
Small-scale farmers are disproportionately affected by failing infrastructure and rolling blackouts to the extent that they are unlikely to survive unless something is done to assist them on these issues
