Chicken firms take a R750m roasting after Davies’ raw trade deal

THE burden of Trade and Industry Minister Rob Davies’ pact with the Americans became clear this week as shares of listed poultry producers shed more than R750-million in value.

Company executives put on a brave face, but investors were not fooled by the official line that the compromise deal with the US over chicken imports was the best for everyone.

Astral Foods was the hardest hit. Its share price shed 8.1% during the week for a loss in value of R628-million — in part because CEO Chris Schutte suffered a heart attack after returning from the talks in Paris.

Shares in RCL Foods, which owns Rainbow Chicken, shed R93-million in value. Quantum Foods, which owns Tydstroom Poultry, saw its stock fall by R18.6-million, and shares in Sovereign Foods, which owns Coun- try Range, lost R15.2-million in value.

Under the deal, following tough discussions in Paris, South African poultry producers agreed to allow imports of 65 000 tons of bone-in chicken from the US free of anti-dumping duties.

The concession was equivalent to 9% of the 730 000 tons the local chicken industry produces a year. Currently, an anti-dumping duty of R9.40 a kilogram is imposed on US chicken in addition to an ad valorem tax of 37%.

In exchange, South Africa can continue to export cars, citrus, wine, chemicals and base metals duty-free to the US under the renewed African Growth Opportunity Act (Agoa) for the next decade.

Faizel Ismail, South Africa’s special envoy on Agoa, said local industry “will also be able to invest and expand [on] the enormous opportunities … in the US market”.

But the poultry industry could lose about R900-million in annual turnover and 6 500 jobs when the deal takes effect in about four to six months, said Kevin Lovell, the CEO of the South African Poultry Association. The industry employs about 130 000 people.

“We did South Africa a favour” by making this deal, he said.

Astral Foods chairman Theuns Eloff said: “We think it’s not a bad compromise, [but] it’s more than we wanted to give.”