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The effects of dumping

Today is the day that more than 1 000 former chicken industry workers woke up unemployed, with no income and no means of feeding themselves, their families and other dependents.

 

FairPlay is a new international anti- dumping movement and our first project is to stop chicken dumping in South Africa.

 

Today workers, unions and company bosses join in a march to the EU offices in Pretoria to protest at the damage being done by dumping.

 

The march highlights what happens when the inevitable unemployment that follows dumping starts to bite; workers with up to 10 dependents lose their means of support, and poor people become destitute and desperate. Ah, say the dumpers, but we are on the side of the angels; we bring cheap chicken meat to feed the poor. This is not only cynical, it dresses up blood-toothed greed as a service.

 

People with no money cannot buy chicken at any price, not even chicken written off as waste, and being sold below the cost of production to drive South African chicken producers out of business.

 

The threat to the South African chicken industry is real. Since 2012 and particularly since early 2016, the dumping of chicken has risen dramatically. Imports of bone-in leg quarters now constitute more than 25 percent of the poultry market.

 

In 2016, up to 30000 tons of chicken leg quarters a month was dumped in the South African market, mainly by the EU and the UK, as well as the US (in terms of the Agoa agreement), and sold into the market at less than the cost of production.

 

Surplus

 

The reason is that consumers in Europe and the US prefer chicken breasts and wings. The brown meat – leg portions of drums and thighs – are popular in South Africa, but are considered surplus by producers concentrating on northern hemisphere markets. They sell this unwanted surplus for any price they can get. This is doing huge damage to the South African chicken industry. An estimated 4 000 to 5 000 jobs have already been lost.

 

RCL Foods has halved production from February 2017 at its Hammarsdale plant in KwaZulu-Natal, with the loss of 1350 posts at the plant. The crisis that the chicken industry has been warning about has arrived. In 2013, the South African Poultry Association warned that unless action was taken to curb imports, some 20 000 jobs would be lost in the country.

 

Read also: Chicken fight rocks SA-Europe relations

 

In 2016, an RCL Foods executive said that if dumped imports continued unabated the South African industry might not survive in its current state for another 8 to 12 months.

 

That means we are now facing the possible collapse of the entire South African chicken industry, putting at risk 110 000 jobs in the industry and a further 20000 jobs in the maize and soya industries which supply chicken producers.

 

In international trade, dumping is the export of a product at a price that is lower than the price charged in its home market, or below its cost of production. It allows an imported product to gain unfair market share and is considered a predatory practice.

 

Dumping is not fair trade, or fair competition. Nor is it fair to consumers. Experience shows that once local industries have been crippled or killed, importers are free to raise prices to whatever level they think the market will bear.

 

Governments, too, are the losers, because those who lose their jobs become dependent on state grants and other support, for years and even decades.

 

South Africa’s food security could be another casualty of chicken imports. According to a recent report in World Poultry, poultry meat has grown to be the most important protein source in the diet of the majority of South Africans.

 

The grain industry produces between 25 percent and 33 percent of the country’s total gross agricultural production. The South African chicken industry accounts for 90 percent of all soya grown locally and after the consumer is the second largest user of maize. The collapse of the chicken industry would have a disastrous impact on the grain industry, food security and the national economy.

 

In the case of the chicken industry in South Africa, FairPlay will press for action against the chicken dumpers by all means possible, until the practice is a sad footnote of history.

 

Francois Baird is founder of the FairPlay movement.

 

This article was first published on www.iol.co.za/business-reporton 1 February 2017

http://www.iol.co.za/business-report/opinion/the-effects-of-dumping-7574269

 

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