Chicken Industry

South African Chicken Producers Reeling from Unfair Competition via Imports

Foreign dominated importers in South Africa claim that large South African producers only want to secure their profits through the imposition of tariffs. This ignores the challenging reality of the domestic chicken industry.

It was both interesting and distressing to learn that the headline earnings per share of Astral, one of South Africa’s leading integrated poultry producers, fell by between 50% and 55% in the six months to the end of the first quarter of this year, compared to last year. One of the factors is the failure of government to implement appropriate new tariffs on poultry.

Of course there are other factors at play, such as rising maize costs and underinvestment by the state in infrastructural development to name two, but the most significant factor is undoubtedly the delay in imposing new tariffs of 82% on imported chicken.

Astral and RCL Foods have both reported sharply reduced profits this year and warned of worse to come if imports continue unchecked. The lobbyists for the importers fail to acknowledge that the RCL chicken business returned to profitability after years of losses only by cutting production, retrenching 1 300 workers and refocusing its business away from market segments dominated by imports.

This is the reality behind the local industry’s application for higher tariffs on Brazilian chicken. The local industry has a legal opinion that supports the belief that Brazil, despite its efficiencies, may be dumping chicken in South Africa.

It is the reality behind previous tariff decisions by the local arbiter, the International Trade Administration Commission (ITAC). It is the reality behind previous anti-dumping penalties imposed on EU countries.

The poultry industry is working on the creation of a Masterplan in collaboration with the former Department of Agriculture Forestry and Fisheries (now Agriculture, Land Reform and Rural Development), the Department of Trade and Industry and other stakeholders. This will be more than a theoretical framework for the industry. It will become the strategic launching pad for this critical local industry that employs more than 120 000 people into a new future of long-term sustainability and growth.