Cape Town – The poultry industry has shrunk by 7% and continues to do so, placing South Africa’s main source of protein at risk due to Western diets and dumping of cheap cuts in the country.
This was one of the growing concerns that were expressed on the first day of public hearings into the state of the poultry industry to the Portfolio Committee on Trade and Industry in Parliament on Thursday.
The South African poultry industry has been beset by a number of challenges in recent years – starting with the threat of losing duty market access to the United States under the African Growth and Opportunities Act (Agoa) and more recently, dumping by the United States and European countries. The industry has lost 6 000 jobs over the past 12 months.
The hearings were opened by the Department of Trade and Industry Deputy Directors-General, Garth Strachan and Xolelwa Mlumbi.
Strachan said South Africa’s poultry industry, despite its challenges, is actually cheaper than the European Union (EU) and the United States.
“There’s a myth that South Africa is more expensive. Although we are more expensive than Brazil, we are looking into that,” he said.
He said a government task team has been established to look into the problems that include trade measures and tariffs, industrial finance and incentives, export support and State sector procurement.
Last week, Deputy President Cyril Ramaphosa told Parliament that government was working with industry in the framework of international trade and using instruments like tariffs and incentives.
Government is also looking at ways to help reduce input costs and make the industry competitive.
The industry, which employs between 48 000 people directly and 63 000 people when indirect jobs are included, has seen domestic demand slowing.
From 2003 to 2010, poultry imports rose by 11% and local production by 7%. Poultry consumption soared in the period leading up to 2010, but then levelled out in the same year.
The department’s concerns were echoed by the South African Poultry Association (SAPA), who reiterated concerns of dumping in the industry. SAPA’s Chief Executive Officer Kevin Lovell presented the association’s findings, which strongly included dumping and the effect of this practice on the local poultry industry. Dumping is the act of selling goods in a foreign market at a price that is less than what they cost to produce in the country of origin.
“We need action against dumping to survive… Nothing is made for us. Everything exported to us is surplus to local requirements in the exporting country…” said Lovell.
Lovell said in 2016, South Africa was the EU’s biggest export destination with more than 19% of exports. The local industry has already lost over 6 000 jobs.
Brining poses threat to industry
The Association of Meat Importers (AMIE) Director, Donald MacKay, spoke of the challenges facing importers, with brining a threat to the industry.
The injecting of liquid into chickens was a growing concern, leading to skewed quantities of chickens.
“The more you dilute the fresh chicken, the cheaper it becomes. You can’t produce frozen chicken without brining. The market becomes more concentrated,” said MacKay.