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North farmer holds thumbs for VAT-free chicken

“The big players are not investing because the industry is under pressure.”

A Pretoria north small-scale farmer hopes chicken will be among the zero-rated products for VAT at the end of the ongoing review.

Clement Pilusa of Onderstepoort is anxiously awaiting the review because “my business cannot survive as things stand”.

Last week Treasury extended the deadline for the review panel to submit its report.

Here’s the current list of VAT-free items:

Pilusa said his business could not survive because he was not a contract producer.

Pilusa is operating at capacity with a stock of 10 000 chickens and selling around 2 000 a week but said success was tenuous.

“My customer base is mostly the informal market where unstable demand makes for difficult production planning and management,” he said adding he was towards earning a contract to produce for one or more of the larger players.

To get there, however, he needs investment in computerised chicken houses and access to abattoirs that meet international standards.

“But the big players are not investing, given the pressure the industry is under,” Pilusa said.

He said local small-scale farmers like himself could only hope that their local produce becomes part of the VAT-free basket.

The idea of expanding South Africa’s list of zero-rated items was not new and was often discussed during budget-time as a means of softening the blow on the poor.

A suggestion has been made to add eight more items to the VAT-free list to benefit the poor.

These items were: bread (currently only brown bread is zero-rated), poultry, flour, candles, soap, basic medicines, pay-as-you-go airtime and education-related goods.

Pilusa was confident poultry would make the list.

Around 400 subsistence and small-scale poultry farmers produce for 17 percent of the market.

Pilusa said chicken was big business in SA “but without help small farmers can not make a profit”.

“When people buy more chicken throughout the year – not only at Christmas and Easter – it is good for all of us in this business,” he said.

But people buy more when they can pay less. That is why I want government to make chicken VAT free.”

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VAT FREE Chicken