Why is chicken so expensive?

CONSUMERS can be forgiven for wondering what happened to the flood of “cheap” imported chicken that the industry was in a flap about when the government agreed to let the United States dump its “waste product” chicken in the country.

Bejay Domun of Ladysmith wrote to Consumer Watch asking for clarity on this matter which I thought was worth investigating because he had a point, especially in light of the fact of moderately rising chicken prices.

“We were told that Brazil, the US and EU have dumped cheap chicken in SA. I have tried all the supermarkets and have not found cheap chicken. All I have discovered is that the prices of chicken sold is more expensive. The supermarket managers have no answers,” Domun said.

According to the poultry industry and meat importers the chicken has arrived but it is not always making its way in any volumes on to the shelves of major urban retail supermarket chains.

SA Poultry Association chief executive Kevin Lovell said the industry had agreed to “take the pain” of allowing 65 000 tons of US chicken to be imported when the African Growth and opportunity Act (AGOA) agreement was re-signed so that other industries such as local automobile manufacturers could benefit.

Lovell said that during the first full year of US chicken bone-in imports – the agreement has been in place for 16 months – almost the entire quota was imported but the supply chain was not always passing on savings to consumers.

“Most of those bone-in portions – 25 000 tons – came in March and that is huge, it is about one and a quarter the size of monthly production of Astal (one of the country’s largest producers) which produces about 40 000 tons a month,” Lovell said.

Lovell said frozen imported chicken, which comprised dark bone-in meat was purchased at cheap prices but this did not always result in a lower retail price.

“Sometimes it is even sold for slightly more which I find bizarre but what happens is they can make a huge profit on the imported product. There is no need to sell it cheaply,” Lovell said.

RCL Foods, producer of Rainbow Chicken, managing director Scott Pitman said the flood of imports was not branded.

“Because it is ‘waste production’ from EU/US/ Brazil – leg quarters that the developed world doesn’t eat much of – these are packed in bulk loose into boxes, frozen and sold to whatever country will buy them at whatever price the seller can get for it, almost always below cost of production,” he said.

“The massive tonnages (20 000 tons per month) being dumped in South Africa is this product. Because it is unbranded and packed in bulk, the types of outlets that buy nearly all of it are mid and low income supermarkets in the glass fronted ‘deli’ area where the cheap meat cuts are sold. You will find the leg quarters in the metal containers behind the deli counter loose and sold for a ‘highish’ price and in low income butchery/grocery chains,” he said.

“Although the dumped leg quarters arrive at a price well below R20/kg, the margins taken by stakeholders in the chain are much higher than for SA chicken and therefore the selling price is actually very similar to SA chicken,” he said.

Pittman said since the re-signing of the agreement more than 3 000 people had been retrenched in the local industry.

I visited Checkers, Shoprite and Pick n Pay in Durban recently and found just one brand of US chicken, Purdue, in the freezers at Shoprite.

It was in fact substantially cheaper than local chicken, although there was only one similar product to compare it to.

A 2.5kg pack of Purdue leg quarters priced at R54.99 worked out cheaper per kilogram (R22 per kg) than a 5kg box of locally produced Goldi leg quarters at R189.99 (R38 per kg).

The local chicken also contained 15% brine (water and spices) injected as an ingredient while the US chicken did not indicate any brining content.

So, it is to Shoprite’s credit that it passed on the savings in this case.

Shoprite Checkers spokesperson Sarita van Wyk said the retailer procured 98% of its chicken from local farmers.

The volumes of imported chicken it sold accounted for less than 2% of total imports.

“The reality, however, is that the constant high demand for chicken outstrips supply in South Africa. In order to supply in the volume demanded by customers, we have to import small quantities when needed,” she said.

Van Wyk said price differences depended on the exchange rate and the deal offered by local suppliers.

“Any savings are passed on to the consumer as per Shoprite Checkers’ policy on all products. The supermarket group currently has very little imported chicken on its shelves due to government allocation to us of the last consignment of US chicken falling far short of that which was applied for,” she said.

She said “from time to time” imported chicken was sold in its butcheries.

“If it is sold as fresh chicken a ‘previously frozen’ sticker is attached to the product. A label identifying the country of origin is affixed to the packaging of all imported chicken in compliance with labelling regulations,” she said.

Astral, the local producer of the Goldi brand, was unable to respond to questions last week.

Pick n Pay Butcheries national manager Ian Crook said the retailer sourced all of its fresh chicken locally and only imported frozen chicken when necessary.

According to the Association of Meat Importers and Exporters chief executive Dave Wolpert 333 000 tons of chicken including processed meat for vienna production was imported between May 1, 2016, and April 30 this year.

He said imported chicken usually had not been brined.

“It goes to the catering industry, to supermarkets that are not part of major chains, to township supermarkets and to free standing butcher shops,” Wolpert said.

Wolpert said butchers should be able to advise customers of the country of origin of their imported chicken. Because it was not brined it offered consumers better value for money.