New chicken industry crisis moves

Saving jobs and preventing plant closures to top enlarged task team agenda

AHIKE in the safeguard duty on bone-in-chicken imports from the European Union (EU) appears to be one of the likely outcomes of a high-level meeting between the government, business and labour held yesterday.

Last month, Trade and Industry Minister Rob Davies imposed a provisional 13.9% safeguard duty on these imports.

He also instructed the International Trade Administration Commission (Itac) to review the duty, taking into account the impact it would have on other Southern African Customs Union members.

The poultry industry criticised the provisional duty as hopelessly inadequate to deal with the crisis caused by the mass import of bone-in-chicken portions from the EU. It applied for a 37% duty.

As Itac has already concluded its investigation into the impact of the imports on the domestic market, the review of the safeguard duty should not take too long to finalise.

Yesterday’s meeting was attended by about 40 representatives of various government departments, industry, trade unions and state entities, such as the Industrial Development Corporation in Pretoria.

It decided to set up a joint task team to address the challenges facing the industry in the short, medium and long term.

A key issue is to find ways to ward off imminent retrenchments and plant closures by producers.

The entire production value chain, including feedstock producers as well as the Department of Agriculture, Forestry and Fisheries, were also represented.

Another outcome was that the government would enter into bilateral negotiations with chicken producers such as Rainbow Chickens Limited (RCL) to look at ways to avoid plant closures and retrenchments.

RCL plans to retrench 1 355 workers at the end of this month.

SA Poultry Association chief executive Kevin Lovell said the joint task team would work on a plan to salvage the industry in a way that was compliant with obligations under the World Trade Organisation and trade treaties.

It was key that a number of government departments were involved.

Department of Trade and Industry deputy director-general Garth Strachan said the industry would have to make reciprocal commitments in return for government support.

These could include producers committing themselves to improving their competitiveness through investment in technology so that the tariffs did not simply serve to keep prices and profits high at the expense of consumers.

An increase in industry competitiveness would mean that support measures would only be needed in the short term.

Another measure under consideration by the department is the designation of chicken as a product which government departments and state-owned entities are required to procure locally.

The Department of Agriculture, Forestry and Fisheries is also involved in a number of projects to support producers.

An interdepartmental government task team has been working on a rescue plan for the industry since mid-November and has accumulated a body of data on the structure of the industry, import penetration, cost drivers, competitiveness and transformation.

“We are looking at the value chain as a whole so robust data is critical,” Strachan said.

This would be used by the enlarged task team to urgently formulate policy interventions in the short, medium and long term to save jobs, support the industry and raise competitiveness.

Strachan said a wide range of supply, demand and trade measures had been discussed at the meeting.

There had been broad agreement at “the very successful meeting” that there was a crisis even though there might be disagreement about causes and some of the data.

There was agreement on the need for a “Team SA” effort, Strachan said.

The task team is due to meet again within two weeks. –