Not the end of Rainbow, but chicken dumping must end
THE sensational headline “End of the Rainbow?” on Friday’s front page (March 27) put an incorrect slant on a report about the reduction of our Hammarsdale operation and the consequent sale of some of our poultry farms that supply chickens to Hammarsdale.
Hammarsdale is not Rainbow Chicken’s only operation. Rainbow, which is part of RCL Foods, is a nationwide business, with six processing plants and about 100 farms in KwaZulu-Natal and the Northern and Western Cape regions. Hammarsdale P2 is one of four primary processing plants; the others are in Rustenburg, Worcester and Tzaneen. We also have two other processing plants: one in Hammarsdale (Hammarsdale P1) and the other in Wolvehoek, near Sasolburg.
Because of continuing losses caused by chicken dumping, we closed one shift at our Hammarsdale P2 plant at the end of January, halving operations there, with the loss of 1 350 positions at the Hammarsdale P2 plant and the farms we are selling. We managed to redeploy nearly 300 people to our other operations, so in all about 1 000 jobs were lost. The rest of our chicken operations in Hammarsdale and in other regions are fully operational.
To put this in context, Rainbow has more than 7 000 employees in our chicken operations across the country.
In order to continue servicing the Hammarsdale operation, we have retained, in full operation, 12 of our 25 poultry farms in the area. The other farms have been closed and are being sold.
We deliberately did not close our Hammarsdale operations so that we could preserve as many jobs as possible in an area where employment is desperately needed. We have also put in place a substantial socio-economic support programme to help those whose jobs have been lost.
To give you an idea of the scale of the Hammarsdale operation, it used to process 1.2 million chickens a week, with up to 9 million chickens on the ground at any one time. That has been halved because of the production cutback and farm closures.
This is not, by any means, the end of Rainbow Chicken. However, we have warned repeatedly that the chicken industry will not survive in its present form unless the government acts in the near future to stop dumping.
It is dumping – exporting chicken pieces at prices below the cost of production – that is crippling the industry.
We are not the only ones – other major producers are reducing production because of chicken dumping, principally from the EU.
Country Bird, the country’s third-largest producer, has said it will close one of its three abattoirs, with the loss of about 1 600 jobs, if dumping is not stopped.
Financial losses are severe and have been going on for some time. Because of dumping, our chicken operations have been losing money for the past five years, recently about R1 million a day.
Halving operations at Hammarsdale is one way we are trying to stem these losses as we increase our efforts to focus more on supplying better margin products.
We have cut out the biggest loss-making lines, which will allow Rainbow to weather the storm, at least while we await government action.
This is the situation that all South African chicken producers face and our fate is not in our own hands.
While dumping continues, so will production cuts and job losses. It is up to the government, which can save jobs by taking urgent and decisive action to stop chicken dumping.
Pitman is the managing director of the consumer division at RCL Foods