It’s becoming a game of chicken for local producers
SOUTH African retailers who are selling dumped chicken at prices marginally cheaper or at similar prices to that of locally produced birds will not only contribute to the destruction of the industry but are putting the health of their consumers at risk.
Local far mers have to comply with a long list of requirements to ensure the chicken that goes to market is safe and traceable.
But when retailers buy dumped chicken, they don’t know where it comes from and whether it has been refrozen after being repackaged.
This, according to Chris Schutte, chief executive of Astral, the largest chicken producer in the country, poses a potentially devastating health risk.
“We’ve just seen with the Brazilian meat scandal what can go wrong. And in a country where we have unemployment of 27% and rising, it makes no sense for retailers to support the European industry at the cost of their own customer base.”
Mike Schussler, chief economist at Economists.co.za, says retailers are worsening the problem by allowing price suppression.
“Preventing local suppliers from adjusting prices according to agricultural circumstances is not fair and causes irreparable harm.
“In the long-term, it’s of great economic importance that local business supports the local industry.”
Shoprite spokesperson Sarita van Wyk says the chain procures more than 98% of its chickens from local farmers. “The reality, however, is that the constant high demand for chicken outstrips supply in South Africa. We have to import very small quantities when needed.
“The amount of imported chicken we sell in our stores accounts for less than 2% of the total amount of chicken imported into South Africa. In compliance with labelling regulations, a label identifying the country of origin is affixed to the product.”
The procurement of locally produced products will always be a priority for Shoprite, she says.
Schutte, however, says it’s simply not true that the South African industry is unable to meet the demand.
“We not only can produce enough chicken to fulfil the per capita demand, we have substantial spare capacity. It surprises me that a local retailer would choose to buy foreign dumped chicken when here at home there is more than adequate supply.
“Why would RCL Foods scale down production if the demand outstripped the supply?”
David North, the group executive of corporate affairs and group strategy at Pick n Pay, says all its chickens are purchased from reputable suppliers with strict quality control. “We support South African production in this and other areas.”
Mark Godfrey, the group financial director for Spar, says all its stores are independently owned but the listed company does not buy any imported chicken.
“Spar itself is not paying any importers for chicken, but the individual owners of stores may be. The owners are not obliged to buy from particular sellers.”
Yesterday, it was reported that 13 of Rainbow Chicken’s 22 farms on the Durban-to-Pietermaritzburg N3 route are up for sale.
The far ms have already been taken out of production, costing 1 350 people their jobs. The price tags for the farms range from R9 million to R60m.
The poultry farming giant stated that because of the increased volumes of dumped chicken flooding the market, primarily from the EU, it had been forced to scale down its operations in Hammarsdale.
Scott Pitman, RCL spokesperson, confirmed the sales to Independent Media, saying the company had also closed one of two shifts at its Hammarsdale plant. Retrenchments took effect at the end of January.
Although Deputy President Cyril Ramaphosa recently told Parliament that the government would try to save beleaguered poultry farms, RCL has maintained it won’t go back on its decision to put the 13 farms up for sale.
It is not waiting for the government’s intervention.
“The farms have already been taken out of production and the staff reductions took effect by the end of January, so there is no staff left on the farms,” Pitman says.
It’s believed that if chicken dumping from the EU is not halted within the next eight to 12 months, more than 130 000 people will lose their jobs and the industry will probably fold.
During an intense debate in Parliament this week, SA Poultry Association chief executive Kevin Lovell said urgent action was required and proposed that measures be put in place to reduce imports by at least half.
This would still make imports the third-largest source of chicken products on the local market.
Of all the chicken consumed in the country, 26% was imported and 45% (240 000 tons) were bone-in chicken portions, Lovell revealed.
The EU imports represented 81%. “We are the EU’s biggest export destination (representing) more than 19% of their (chicken) exports,” Lovell said.
Marthinus Stander, chief executive for Country Bird Holdings (CBH), the country’s third-largest poultry producer, says the industry is “on the brink of collapse”.
CBH gave notice in August last year that it would close down its Mahikeng abattoir, which it acquired in 2006 when the previous company, Agrichicks, went into liquidation, employing about 1 500 people.
“I t ’s a very hard decision if this company that you resuscitated, you have come to the conclusion that you have to close its doors.
“The reason for that is very specifically the uncontrolled subsidised dumping of portions into the SA market by the EU.”