Media Releases

Patel kicks the poultry industry when it’s down

Statement by Francois Baird, founder of the FairPlay movement

Instead of a plan to support South Africa’s beleaguered poultry industry, the government has imposed another unnecessary burden in the form of subsidised imports of nearly every chicken product.

The poultry industry has just suffered the worst year in its history, the huge losses caused by load shedding, infrastructure failures, high input costs and severe outbreaks of bird flu.

Now, in order to counter non-existent shortages because of last year’s bird flu, an investigation initiated by trade minister Ebrahim Patel has resulted in the announcement of substantial rebates on the tariffs applied to imported chicken.

This is shortsighted, ill-advised, unnecessary and foolhardy in the extreme. What were Minister Patel and his advisers thinking?

The new regulations authorising tariff rebates specify that they can be considered only if there is a shortage of chicken supplies to the local market, and only if that shortage is caused by bird flu outbreaks. Neither condition applies at the moment – bird flu has abated, the local poultry market is in oversupply and prices are dropping.

If that is not enough, the regulations are vague and embarrassing. There is no definition or threshold of what constitutes a shortage and moreover how is it to be determined whether any shortage, of which there is none, is being caused by bird flu. How is one to make sense of these unfathomable absurdities?

Minister Patel must explain to the country why, when there is no local chicken shortage, he has imposed unnecessary tariff rebates which are going to add to the poultry industry’s losses. Jobs will be lost, too, and investment which would have created more jobs is likely to be withheld.

What the industry needs is a helping hand, not to be kicked when it’s down. Many of its woes – load shedding, water supply failures and deteriorating road, rail and harbour infrastructure – are government-related.

So, too, are the huge losses resulting from the mandatory culling of millions of chickens to curb the spread of bird flu. Other governments compensate their chicken farmers for these losses. The South African government resolutely refuses to do so.

But, instead of support, all the government can come up with is another crippling blow.

The immediate winners will be chicken importers, who are already jumping for joy. They will be looking forward to huge profits, not only from increased import revenues but from the larger margins that the tariff reductions will enable.

Whether consumers will benefit remains to be seen. FairPlay has yet to see a public commitment by importers to pass on every cent of the lower tariffs. The industry has not denied making fat profits from dumped and low-priced imports that sell at market prices. The new rebates can make those profits even fatter.

The losers will definitely be South Africa’s poultry producers. The big ones will see a further squeeze just when they were hoping to return to profitability. More small-scale farmers may go out of business, with new job losses adding to the misery in impoverished rural areas.

It is an incomprehensible decision that Minister Patel may yet come to regret.