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Only a masterplan will prevent the chickens coming home to roost

Only a masterplan will prevent the chickens coming home to roost

15th Aug 2019
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Only a masterplan will prevent the chickens coming home to roost

by The FairPlay Movement
15th Aug 2019
in Commercial Farmer, Farmers
Reading Time: 4 mins read
A A
Only a masterplan will prevent the chickens coming home to roost

Tumi Mokwene farms in Kameeldrift West near Pretoria.

The SA chicken industry is at once beset with challenges and brimming with opportunities. By managing the former and capitalising on the latter, chicken can become a major driver of economic growth and social advancement in our country.

As it stands, the poultry industry is the largest component of SA’s agriculture sector, contributing some 18% of agricultural GDP in 2016. The industry is also a major employer, with some 110 000 direct and indirect workers, while a further 20 000 jobs in the grain industry depend on feed supplies to poultry producers. It is estimated that each poultry worker supports up to 10 other people.

SA is a highly efficient and competitive chicken producer. In 2014, the University of Wageningen ranked SA fifth of 16 countries surveyed. We were slightly behind producers in the US and more expensive than South America. However, on average, SA broiler chicken production costs are at least 25% lower than in EU countries. The updated study will be released towards the end of March this year, and preliminary results indicate that SA has maintained its position.

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Chicken is not only economically strategic: it is a significant component of the country’s food security given its status as South Africans’ best loved source of protein.

Per person, we eat twice as much chicken as beef, four times more than eggs, eight times more than pork an almost 13 times more than mutton.

Despite its obvious importance, the chicken industry is under siege from imports that often amount to dumping. At the moment, the main culprit is Brazil. As other markets have recently closed their doors against Brazil due to food-safety concerns, this massive exporter of chicken is increasingly targeting SA. This process is abetted by importers and middlemen who buy in bulk and make vast profits by selling into the SA market at, or just under, the price of locally produced chicken. In this way imports have gained market share, taking up increased local demand while SA producers have to scale down, workers lose their jobs and small towns in the countryside die.

Brazilian poultry imports have doubled over the past four years, rising from 15,000 tons a month in October 2014 to 30,000 tons in October 2018. Currently, 61.5% of SA’s poultry imports comes from Brazil. The balance is made up mainly by the EU and the US, courtesy of trade agreements between SA and those countries.

The impact of dumping on the SA poultry market is alarming.

In recent years some 6 000 jobs have been lost and a number of smaller producers have closed or been taken over. The SA Poultry Association (SAPA) estimates that for every 10 000 tonnes less chicken meat produced in South Africa, 1 000 jobs are lost. The tragedy here is not just the lost jobs; it is the lost opportunity all along the poultry value chain to sustain local enterprise.

To safeguard the industry, SAPA applied to the International Trade Administration Commission (ITAC) for an 82% ad valorem import tariff on bone-in and boneless frozen chicken from many non-EU countries, including Brazil.

Important as increased tariffs are, what the industry desperately needs is a masterplan that strategically and coherently coordinates activities and investment from all stakeholders – public and private sector alike. Only through such a plan can the industry’s full potential be realised to the benefit of all South Africans.

A case in point is the disjointed way in which investment in the industry currently takes place.

Government spends much money and energy on the establishment of black chicken farmers and the building of infrastructure, such as abattoirs and processing plants. Sadly, many of these projects happen without due consideration of up- and downstream linkages, which impacts their sustainability and results in government and the large producers crossing swords, instead of taking hands. Also, where farms fail, government has been known to buy them out in order to keep the farmer going.

Current state investments furthermore address only the supply side of the industry. The market, or demand, side is not part of the equation, and government is strangely reluctant to institute the measures, such as trade tariffs or stricter food-safety regulations, needed to protect the very market that the people it is investing in have to sell their products to.

A masterplan can turn this around, while also directing attention to the input factors that are critical to chicken farming and processing, such as reliable water and electricity supplies, and road infrastructure. In several cases, the large industry players are helping to maintain municipal infrastructure in the interest of ongoing production.

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The fact is that government’s main concern need not be investment at the primary level. The local chicken industry has proven its ability to put farmers on land. Its track record shows at least 70 black farmers who now own their farms, in addition to being sustainable and successful broiler chicken suppliers, thanks to technical assistance and support by the private sector.

Finally, we as consumers have a vital role to play. If we refuse to buy imported chicken, there will be no market for it. By insisting on locally produced chicken, we can all become part of a social dynamic that drives change that will benefit workers, communities and our economy. Every piece of chicken you and I buy, makes all the difference!

Tags: BrazilEUInternational Trade Administration CommissionSA chicken industrySA Poultry AssociationUniversity of Wageningen
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The FairPlay Movement

The FairPlay Movement

The FairPlay Movement is a not-for-profit trade movement that fights for jobs. Its goal is to end predatory trade practices between countries so that big and small nations play by the same rules. It supports the principle that penalties for transgressing those rules apply equally to everybody. Advocacy against chicken dumping is currently FairPlay’s flagship campaign.

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With 11 global awards in the first three years of its existence, Food For Mzansi is much more than an agriculture publication. It is a movement, unashamedly saluting the unsung heroes of South African agriculture. We believe in the power of agriculture to promote nation building and social cohesion by telling stories that are often overlooked by broader society.

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