Poultry producers cry foul over chicken dumping
● The prospects for a turnaround in the local chicken industry’s fortunes remain slim as it reels from the dual impact of imports — particularly from Brazil, which accounts for about 60% — and bird flu, which broke out in South Africa in June last year.
Imports from EU countries other than Denmark were banned last year when bird flu was reported in Europe.
“At the moment we are not importing from the EU countries, except from Denmark, and we are still importing from Brazil,” Mpho Maja, national director for animal health at the Department of Agriculture, Forestry and Fisheries, said this week.
According to the South Africa Poultry Association, Brazil is the leading source of poultry imports. Imports last year from Brazil were 244 564 tons, a significant increase from 168 666 tons in 2014.
That EU imports have been banned offers cold comfort for the chicken industry, which has been forced to cut jobs and consolidate operations in an effort to remain in operation.
In March last year, RCL Foods cut 1 500 jobs and reduced the birds per week under production by about 7 000.
Bird flu has forced the culling of more than 500 000 birds across the country and caused losses of millions of rands.
Maja said that although no recent outbreaks of bird flu had been reported on commercial farms, the department would meet soon with all poultry industry stakeholders to ensure everything was in place to avoid a repeat of last season’s devastation.
Restocking takes time
“The impact has been that for many poultry producers in the country, they are still struggling to restock those bird populations which they had to cull. It is not something that can be sorted out overnight, but will be a long-term process,” she said.
The restocking of birds might also have an impact on chicken prices.
Quantum Foods, whose operations include the supply of live birds to abattoirs, said in a trading update for the four months to January it had suffered “an additional loss of 242 000 birds following the further outbreak of avian influenza on a layer-rearing farm in the Western Cape”, which had led to fewer eggs being produced.
The disease broke out in the Western Cape in September last year.
“Compared to the first four months of 2017, average selling prices per dozen increased by 32% and egg production costs were lower due to the decline in feed costs,” Quantum said.
Healthy profit margins
“Egg sales volumes declined by only 5.6% due to avian influenza production losses, but the profit effect of the improved margins is expected to be substantial for the first half of the financial year,” it said.
Astral, a leading Southern Africa poultry producer with the brands Goldi and Festive, said the threat of the further spread of bird flu virus was “a major contributor towards uncertainty” around the sustainability of certain sectors of the local poultry industry.
Marthinus Stander, CEO of Country Bird, South Africa’s third-biggest producer, said bird flu last winter had “cost the industry dearly” and was likely to strike again this coming winter.
“The saving grace of the industry has been the record 2017 maize crop which provides significant input cost reprieve,” Stander said.
“While dumped leg quarters still come in at alarming numbers, bird flu in the European Union slowed down dumping from that source, but the slack was quickly taken up by Brazil.
“The dumping continues at monthly rates which far exceed the total production of all chicken by Country Bird . . . We remain very concerned.”
Permanent safeguard
Provisional safeguard duties against the EU of 13.9%, which were implemented in December 2016, expired in July last year.
A decision on a permanent safeguard duty against the EU is pending, while discussions between the industry and the government on how to secure trade terms more favourable to local industry continue.
Stander said if unfair dumping was addressed adequately by the government, the local poultry industry — which he said had proved it could be competitive in global terms — could deliver for the economy.
“South Africa has no need to import chicken and expose our consumers to health risks,” he said.