For immediate release.
Statement by Francois Baird, founder of the FairPlay movement.
The South African chicken industry is headed for a crisis, caused by a variety of factors in addition to dumping, most recently the disastrous impact of daily load shedding on 24-hour chicken production.
Chicken production is vital for South Africa’s food security. Chicken is produced in vast and affordable quantities, and is by far the country’s most popular meat protein, particularly for low income households. Yet load shedding has compounded the industry’s burdens of dumping, poor infrastructure and municipal service delivery, and could put the nation’s food supply under threat. No doubt the whole agriculture production sector is dealing with similar constraints and disruptions, resulting in negative impacts on food production as a whole. The costs are passed onto the consumer by way of unavoidable price increases.
Fast food outlets such as KFC and Nando’s have recently had to close stores or curtail offerings because of the impact of load shedding on key suppliers such as Astral Foods, the country’s biggest chicken producer.
Those problems have been resolved, at least for the moment, but the poultry industry is warning that if the electricity supply disruptions continue, shortages could spill over into the retail sector. In recent weeks some 10 million day-old chicks have had to be destroyed because they were headed for production houses still occupied by grown chickens that producers could not slaughter.
It is not only the major producers that are in trouble. Small-scale poultry farmers, vital for both job creation and food security in rural areas, have been hard hit, resulting in business closures and job losses. A tragedy is looming on multiple levels.
The government seems unconcerned, perhaps believing that private sector producers will be able to overcome the difficulties. It should instead act to support a strategic national industry – strategic because it supplies most of the nation’s meat, consumes much of the country’s maize and is a key employer in the agricultural sector. In short, the threat to the industry is a threat to South Africa’s food security.
According to the Bureau for Food and Agricultural Policy (BFAP), the poultry industry is South Africa’s largest agricultural subsector, contributing in excess of R50 billion to the gross value of agricultural production in 2021 – almost 14% of the total agricultural production value.
The industry employs more than 50 000 people directly, and many more indirectly through its integrated value chain. It accounts for around 40% of total feed use in South Africa.
“Its contribution to food security is anchored in its ability to provide an affordable source of protein to South African consumers and in 2021, it accounted for 66% of total meat consumption in South Africa. This share has been growing consistently over time,” BFAP says.
The poultry master plan, signed in 2019, was designed to rescue the industry from a different crisis – a flood of dumped poultry imports that had caused production cuts and cost thousands of jobs. The objective was to stabilise the industry, stop dumping and expand local production for the domestic and export markets.
Some of those objectives have been achieved. The industry has invested and expanded production, and is confident that exports will soon take off. There has been some curtailment of illegal and predatory trade, though the industry was hugely disappointed that the government decided to approve new anti-dumping duties against Brazil and four European Union countries, but to suspend implementation for a year to August 2023.
Since then, additional and unforeseen threats have emerged, swirling into black clouds that could presage a perfect storm for South Africa’s chicken producers.
Chicken production has been hammered by the poor state of South Africa’s infrastructure, and in particular its rural roads. Astral has battled inadequate water supplies at its huge Lekwa production plant, despite its proximity to the Vaal river. Poultry producers are having to invest millions in their own electricity supply because Eskom cannot keep the lights on in the chicken houses. Small poultry farmers without the means to provide alternative energy, are in dire straits. Maize and soya farmers who feed the chickens, cannot irrigate their crops. A poultry feed shortage may loom next year, further escalating input and consumer prices for chicken.
Now stage 6 load shedding has disrupted chicken supplies to fast food outlets, and may well have a wider impact on supplies to retailers and supermarkets. That hasn’t happened yet, but the warning signs are there.
It takes a lot of chicken to feed protein-hungry South Africans. The industry slaughters nearly 20 million birds per week, in round-the-clock operations. These schedules are now being disrupted by eight or more hours a day of power cuts, and worse may be to come when electricity demand spikes in the winter months ahead.
It is time for a crisis meeting of the poultry master plan signatories, including Agriculture Minister Thoko Didiza and Trade, Industry and Competition Minister Ebrahim Patel. The Eskom problem is not going to be solved in the near future. Together, the poultry industry and the government need to draw up a plan to ensure that the industry and its jobs are protected, and that the vital supplies of affordable chicken to the nation are able to continue. The plan should help pay for the support by re-instituting dumping duties immediately and scrapping VAT on local chicken and chicken feed.
The poultry industry is technologically advanced and internationally competitive, well able to fulfil its role in underpinning South Africa’s food security. It uses relatively small land areas in work-scarce rural areas to produce a world-class product. Yet it is under threat from circumstances outside its control.South Africa’s poultry industry and its value chain should be declared a key pillar of food security and accorded national prioritisation to minimise disruptions to its ability to feed the nation.
