Chicken Industry

Poultry industry requires threefold structural reforms

The poultry industry in the country requires three structural changes to grow and contribute further to the country’s economy and overcome internal challenges, as well as the external challenge of cheap imports. This was indicated by National Agricultural Marketing Council (NAMC) chief economist Dr Sifiso Ntombela during FairPlay Movement’s webinar, titled The Poultry Value Chain: Roadmap to Recovery, held on July 9.

This article was first published in Engineering News.

Ntombela emphasised the importance of the industry, which was a strategic and considerable part of the agriculture economy and played a key role in achieving food security and contributing towards the country’s nutritional food basket balance.

He highlighted that it was important to understand that the industry not only created commercial growth for the country in terms of established business, but was also important for small and household farmers, who kept chickens in their backyards.

A key factor was how to ensure these were integrated into the formal value chain, he noted. Ntombela indicated that the first challenge that required reform was that of the country being inundated by cheap poultry imports, which speakers said was causing trade dumping and undermining the competitiveness of local prices.

To mitigate this, Ntombela said there needed to be structural reforms in terms of trade policy, to ensure fair competition for local business.

He said this had to go further and include how local farmers can participate in the exporting of poultry to international markets. Ntombela noted that the lack of participation in the export market talked to the issue of a lack of traceability and under-innovation required for value-add to products in the country.

He emphasised that trade, therefore, had to look at both import and export potential to ensure farmers were protected and supported from both sides. Ntombela indicated that the second challenge was that of the high cost structure of the supply chain, which tended to impact on price competitiveness. Therefore, he said there was a need for restructuring of price mechanisms in the supply chain.

He noted that this called for greater investment and ensuring that industries critical for poultry growth, such as yellow maize for feed, were supported so that it relieved the cost pressure for farmers, while simultaneously developing these value chains as well. Thirdly, Ntombela said an important structural factor was the transformation of the industry, with growth needing to be on an inclusive basis.

He indicated that this went beyond just ensuring that black or emerging farmers play a meaningful or more prominent role in the industry, to how to unlock and create a system that could coexist with the small and household farmers alluded to earlier. Ntombela said these reforms required strong public-private partnerships, with a targeted committed from government and the private sector.

The poultry masterplan, a comprehensive plan that consulted with stakeholders from across the industry, is slated to cater to these reforms. Ntombela said implementation of the masterplan was held back by the pandemic, but noted that the process was restarting. FairPlay Movement founder Francois Baird, meanwhile, said that to help the industry in light of the pandemic, and other challenges, especially cheap imports, required several steps.

This included bringing some form of anti-dumping action against dumping trade, such as tariffs. He emphasised that now was the time to do this, as, with supply chains being disrupted, many countries that engaged in these cheap imports would have excess poultry on hand, and, when supply chains reverted to normal, the country would face an “avalanche” of imports which would severely impact the local industry. He also called for the masterplan to be implemented.

Moreover, he indicated that there was a need for the same rules to apply to imported poultry products as to local products.

Importantly, he said there needed to be an initiative of value chain tracing, so that it could be known where the products came from.