From the Desk

The Poultry Bulletin - - CONTENTS -

In this De­cem­ber is­sue, we’d like to give our greet­ings to you all and hope that you have a blessed Christ­mas with your fam­i­lies. May the sea­son bring cheer to all, for as dif­fi­cult as the life of the in­dus­try might be, our fam­ily lives stay rel­e­vant and de­serv­ing of sup­port and be­lief.

Some econ­o­mists are pre­dict­ing that South Africa will be in a re­ces­sion next year. While I hope their pre­dic­tions are wrong, it’s clear the econ­omy is wal­low­ing in a shal­low sea. It’s hard to think of a rea­son for real hope, but hope we must be­lieve in. As at the date of writ­ing this let­ter, a true pic­ture of the drought risks we face still isn’t avail­able. In prac­ti­cal terms, we’ll strug­gle to im­port more than about two mil­lion tonnes of maize, so as long as the lo­cal har­vest is at least eight mil­lion tonnes, we’ll have enough to eat and use as feed. Of course, a short­age of white maize will make for some dis­grun­tled maize meal con­sumers. High prices are here to stay. We’ll make a point of keep­ing mem­bers up­dated on the sta­tus of the drought, and have al­ready made sub­mis­sions to DAFF to as­sist them in their plan­ning. It’s an arith­metic fact that it is the users of maize who are al­ready suf­fer­ing, hav­ing to pay R 8,4 bil­lion for their maize ver­sus last sea­son, yet the maize in­dus­try as a whole has lost only around R1 bil­lion year on year.

New Or­gan­i­sa­tions

The first meet­ing of the new Egg Or­gan­i­sa­tion Com­mit­tee took place on 12 Novem­ber. The new ex­ec­u­tive has

been con­firmed as Robin Barns­ley as Chair­man, Nic El­liot as Vice-chair­man, and Dr Naude Ros­souw as third ex­ec­u­tive mem­ber. The board rep­re­sen­ta­tives are Robin Barns­ley, Ach­mat Brinkhuis, Koos Pre­to­rius and Wil­lie Bosoga. The two al­ter­nate Board mem­bers are Dr Naude Ros­souw and Colin Steen­huisen. Roelof Viljoen has been re­de­ployed to an­other po­si­tion within the Quan­tum group of com­pa­nies, so the new rep­re­sen­ta­tive from Quan­tum will be Adel van der Merwe.

The Egg Or­gan­i­sa­tion re­viewed and ap­proved their own bud­get and de­vel­oped a po­si­tion on the shared ser­vices bud­get. Some im­por­tant dis­cus­sions cen­tred on our abil­ity to sell sta­tis­tics to com­mer­cial bod­ies. This is an idea that we’re ex­plor­ing with our com­pe­ti­tion lawyers to pro­tect you, as data sup­pli­ers, and SAPA as your rep­re­sen­ta­tive body. I’m not sure how much money we’ll make from sell­ing sta­tis­tics, but the prin­ci­ple is sound in my view, and worth ex­plor­ing. A sim­i­lar ar­gu­ment ex­ists for the web­site, which is cur­rently sim­ply a cost for mem­bers. Ways of gen­er­at­ing at least some in­come from the web­site will be ex­plored in due course.

A long dis­cus­sion was held on the PDMA bud­get. So far, we haven’t utilised the an­nual bud­get in any of the years fol­low­ing the PDMA’S for­ma­tion. We think it op­por­tune to re­con­sider the PDMA bud­get af­ter the ap­point­ment of the new PDMA Di­rec­tor and then to­gether with he or she, re­con­sider the strate­gic ra­tio­nale of the agency and the most ef­fec­tive way of achiev­ing th­ese goals. It’s my per­sonal view that we’ll be able to have an ef­fec­tive PDMA on a lower op­er­a­tional bud­get than at present.

The Egg Or­gan­i­sa­tion con­sid­ered that the pro­posed PR cam­paign was un­af­ford­able for them at this stage of their or­gan­i­sa­tional de­vel­op­ment. They were of the view that the idea is good and is worth con­sid­er­ing at a later stage. The com­mu­ni­ca­tion bud­get will stay in its cur­rent form un­til we have all new staff in place and a bet­ter idea of likely in­comes for SAPA and its→

con­stituent or­gan­i­sa­tions.

It’s clear that with the cur­rent level of mem­ber­ship, the re­duced 2016 bud­get is still in ex­cess of likely in­come. The fund­ing for­mula re­mains 1c/dozen eggs sold. A model to fairly in­voice other parts of the value chain is to be de­vel­oped and ap­proved, with chick pro­ducer con­tri­bu­tions to re­main as be­fore. To get the new Egg Or­gan­i­sa­tion on its way, we’re go­ing to need quite a few new mem­bers. This will be a key pro­ject for 2016.

As ex­pected, the Galliova bud­get for 2016 was ap­proved with a few vari­a­tions from the ‘stan­dard’ model. It’s in­tended to host the Galliova awards out­side of the Western Cape and there’ll be some changes to the prize cat­e­gories. The prizes will be Food Writer Mag­a­zines; Food Writer Week­lies and News­pa­pers; Health Writer; Up and Com­ing Writer (Food or Health); Egg Cham­pion (Food or Health); and On­line Writer (Food or Health).

The 2015 ver­sion of Galliova gave us me­dia ex­po­sure worth R 3,2 mil­lion for a bud­geted cost of much less than that amount. A good in­vest­ment in­deed.

The Egg Or­gan­i­sa­tion con­sid­ered how best to use the levy sur­plus. We con­sid­ered it un­wise to make an ap­pli­ca­tion to the NAMC prior to clar­ity on our fu­ture pur­pose be­ing reached. Now the new con­sti­tu­tion is in place, it’s time to make such plans. The Broiler Or­gan­i­sa­tion will have the same dis­cus­sion and the Board will then rule on the ap­pli­ca­tion. In terms of the NAMC guide­lines, sur­plus levy funds should be spent on trans­for­ma­tion ac­tiv­i­ties. The Egg Or­gan­i­sa­tion con­sid­ers that es­tab­lish­ing a ring-fenced fund out of which growth in the funds can be used for train­ing and re­lated pur­poses is the pre­ferred op­tion. This’ll make it an ev­er­green fund. The Egg Or­gan­i­sa­tion would like to use some of the sur­plus levy money to sat­isfy our obli­ga­tions to­wards the Univer­sity of Pre­to­ria to fund the Chair in Poul­try Health and Pro­duc­tion. What­ever the Board’s de­ci­sion, it’s un­likely this fund will be in place much be­fore the end of next year. It’ll be a good step for­ward to close off the levy chap­ter in this way.

The Egg Or­gan­i­sa­tion con­sid­ered there might be some le­gal un­cer­tainty as to eth mi­cro­bi­o­log­i­cal stan­dards re­quired for un­pas­teurised egg pulp. Stan­dards for pas­teurised pulp ex­ist, so we’ll be trawl­ing through all ap­pli­ca­ble leg­is­la­tion to see what reg­u­la­tions and Acts might ap­ply in this case. If any reader has a view on this mat­ter, we’d be grate­ful if you’d con­tact us to dis­cuss th­ese in some de­tail.

Af­ter our most re­cent meet­ing with DAFF on the pro­posed changes to the Agri­cul­tural Prod­ucts Stan­dards Act (APS) that are needed if we’re to have valid free range reg­u­la­tions in the coun­try, it be­came clear that the process is still go­ing to be a drawn out one. DAFF are will­ing to con­sider is­su­ing the draft reg­u­la­tions for com­ment when the APS Act goes to Par­lia­ment to try speed things up, but this is still a cou­ple of years from now. Since the def­i­ni­tion of free range in the cur­rent egg pack­ag­ing reg­u­la­tions is far too lim­ited to have any con­nec­tion with what con­sumers be­lieve free range to be, we’ve agreed to draw up a free range pro­to­col that can be mon­i­tored by a third party agency and carry a SAPA mark. We hope this’ll as­sist pro­duc­ers and con­sumers to know what free range means. A team will start work­ing on the draft pro­posal early next year, and all free range pro­duc­ers, in­clud­ing broiler pro­duc­ers, will be in­vited to com­ment when it’s ready. The cost of draw­ing up the sys­tem will be car­ried by SAPA, but the cost of the au­dit­ing by the in­de­pen­dent third party will be for pro­ducer’s ac­count.

The first meet­ing of the new Broiler Or­gan­i­sa­tion Com­mit­tee and the Board will take place af­ter this let­ter is writ­ten. We’ll re­port on their de­lib­er­a­tions in the next let­ter. The Board of the Poul­try Bulletin and the Trans­for­ma­tion Com­mit­tee will meet at the same time. I look es­pe­cially for­ward to the Trans­for­ma­tion Com­mit­tee meet­ing, as we need to give im­pe­tus to change in our in­dus­try. We still await the des­ig­na­tion of poul­try (meat and eggs I hope) by the dti as this will give a real boost to the mar­ket op­por­tu­ni­ties avail­able to smaller and new par­tic­i­pants in the poul­try value chain. The Poul­try Health and Wel­fare group met last month and the most im­por­tant mat­ter dis­cussed was to re­con­sider us­ing the pro­posed SABS stan­dard as an ad­junct to our re­vised Code of Prac­tice. The idea is that we should work

on the Code of Prac­tice at the same time as we are en­gag­ing with the SABS on their pro­posed stan­dard and see which mech­a­nism will serve the needs of the in­dus­try best.

SAPA Strat­egy

Great news is that Dr Char­lotte Nkuna has ac­cepted the po­si­tion of Se­nior Ex­ec­u­tive and will join SAPA on 1 De­cem­ber. She will be look­ing af­ter the in­ter­ests of the Egg Or­gan­i­sa­tion, trans­for­ma­tion, and most of the govern­ment re­la­tions port­fo­lio.

We’ll be in­ter­view­ing can­di­dates for the PDMA po­si­tion on 1 De­cem­ber, and I hope my next let­ter will carry an an­nounce­ment of the new in­cum­bent. Then we’ll have our new and smaller team in place and in op­er­a­tion.

As men­tioned last month, all three staff mem­bers re­trenched in the last round of our re­struc­tur­ing have taken their re­trench­ments to the CCMA for res­o­lu­tion. As at the date of writ­ing this let­ter, one of the ex- staff mem­bers has set­tled the mat­ter with us, a se­cond ex- staff mem­ber has re­ferred his case for ar­bi­tra­tion with a date still to be de­ter­mined, and the third ex-staff mem­ber has gone through the con­cil­i­a­tion phase of the CCMA process with fur­ther steps per­haps to fol­low. This means that it’s un­likely th­ese mat­ters will be re­solved be­fore the first quar­ter of next year.

I men­tioned last month that we dis­cov­ered an ex-staff mem­ber has mis­ap­pro­pri­ated the DPFO name, and ap­par­ently used this to can­vas for mem­bers, and per­haps funds, for an al­ter­nate or­gan­i­sa­tion to SAPA. The le­gal process to re­cover our as­set is on­go­ing, and as with all such pro­cesses, we can’t pre­dict how long it’ll take for the mat­ter to be re­solved.

Trade

Last month I wrote about the draft AGOA guide­lines hav­ing been pub­lished, pre­ma­turely in our view. We’ve par­tic­i­pated in the ITAC process, laid our con­cerns, and made var­i­ous in­puts as well. We do still hold the power to re­sist if the guide­lines are not to our rea­son­able sat­is­fac­tion. There are nu­mer­ous dif­fi­cul­ties that ITAC faces if it acts out­side of the agreed process that we par­tic­i­pated in over the last year or so.

It’s im­por­tant to note that al­though we’re party to dis­cus­sions on the an­tidump­ing duty free quota, we’re not party to dis­cus­sions on SPS is­sues. Th­ese is­sues shouldn’t be part of AGOA, as they’re the nor­mal work of ve­teri­nary health ex­perts in all coun­tries. Since sci­en­tific knowl­edge changes with time, there’s no rea­son for SPS pro­to­cols not to be re­viewed as and when knowl­edge changes, but it shouldn’t ever hap­pen that th­ese rules change be­cause trade ne­go­tia­tors want them to. Apart from the HPAI and Sal­mo­nella con­cerns that the US raised, we hope they’re alive to the fact that ar­senic con­tain­ing coc­cid­iostats are not al­lowed in South Africa. We hope there­fore that ad­di­tional care will be taken in se­lect­ing from the US stock­pile of sur­plus dark meat to make sure that it is not re­jected for con­tain­ing un­reg­is­tered sub­stances when it lands on our shores.

You’ll all hear whether the US threat to our other agri­cul­tural ex­ports is car­ried out af­ter you’ve read this let­ter and be­fore the next one is in your let­ter­box. My sense is that a com­pro­mise of sorts will be cob­bled to­gether and we’ll limp along to the next round of strong arm pres­sure that the US will ex­ert on us. As this is their gift, they hold the strings. We sim­ply have the power to de­ter­mine what we’re pre­pared to give and what we aren’t. At an AGOA ben­e­fi­cia­ries meet­ing held last month, the cit­rus in­dus­try ac­knowl­edged that they’ll con­tinue ex­port­ing to the US even if tar­iff ben­e­fits are with­drawn. This’ll af­fect their prof­itabil­ity but not their abil­ity to ex­port. Will the same ap­ply to other agri­cul­tural ex­ports? We’ll have to wait and see.

There’s been a lot of me­dia ex­po­sure of late on AGOA. As I’m in­ti­mately in­volved in the process, I un­der­stand the nu­ances of the dis­cus­sions. It fas­ci­nates me how lit­tle un­der­stand­ing of the process is re­flected in our me­dia. At the risk of bor­ing you with rep­e­ti­tion, the fact that AGOA was re­newed is tes­ti­mony to the good work that the dti and Min­is­ter Davies have done over the last while. The fact the US keeps mov­ing the goal­posts to try to wrong foot us isn’t a re­flec­tion of the abil­ity of dti to man­age the process but rather a state­ment of the na­ture of the process - the US sets the rules as and when it wants to. It’s sur­pris­ing to see how much ‘re­cip­ro­cal’ type lan­guage is in the cur­rent ver­sion of AGOA when no other African coun­try who ben­e­fits from AGOA had

any in­put into the ac­tual draft­ing of the re­newal Bill.

We met with the US Em­bassy to dis­cuss our ex­ports to the US and one can see that this will be a dif­fi­cult process. The red meat in­dus­try has been try­ing for about ten years to get mar­ket ac­cess. In our case, the US claims that we have HPAI in South Africa. Now you all know that to be false, but how do you prove some­thing to peo­ple who choose not to fol­low the ra­tio­nal and proper man­ner to dis­cuss such mat­ters? As a fur­ther ex­am­ple, the US has re­cently de­clared it­self free of HPAI and yet, by its own ad­mis­sion, it hasn’t cleared up all in­fec­tions in back­yard flocks. All of a sud­den, back­yard flocks are no longer chicken! Now that we’re in la-la land, what’ll they say if other coun­tries stop re­port­ing HPAI by claim­ing it’s only in back­yard flocks and so they don’t have it? A chicken is a chicken is a chicken.

At last we seem to have a date for the Namibia mat­ter to go to trial, ex­pected to be heard in June next year. I think past ex­pe­ri­ence has tem­pered my en­thu­si­asm that the Namib­ian govern­ment and the Namib­ian poul­try com­pany in­volved won’t try fur­ther de­lay the mat­ter, but we’ll present our case as soon as we can. De­lay­ing the mat­ter might frus­trate us, but it doesn’t make the case of the other side any stronger. Clearly con­sumers have been the losers in this mat­ter, with a few em­ploy­ees and even fewer own­ers get­ting some ben­e­fit from the ban on IQF im­ports and the re­stric­tions on to­tal im­ports.

Wiesen­hof, the big Ger­man pro­ducer who had taken the govern­ment and us to court about what they claimed was the in­ap­pro­pri­ate use of the Anti-dump­ing leg­is­la­tion by ITAC and the State have with­drawn the mat­ter and agreed to pay our taxed le­gal costs. They’ve yet to agree to pay taxed le­gal costs in their first failed ap­pli­ca­tion to stop the pro­vi­sional mea­sures that were in place last year. We’ll be deal­ing with this mat­ter in the next while and hope­fully we can tick off one more le­gal chal­lenge to our trade reg­u­la­tory regime early in the new year.

Brin­ing

We had our long promised meet­ing with DAFF of­fi­cials

last month. The meet­ing was very suc­cess­ful in that both par­ties ac­knowl­edged that the man­ner in which they’d been in­ter­act­ing with each other wasn’t to the nor­mal stan­dard ex­pe­ri­enced in our many other in­ter­ac­tions. Now we can’t undo the past but we can atone for it, and I be­lieve both par­ties want to do this. DAFF share our view that the coun­try needs a solid, en­force­able regulation. They’re pre­pared to lis­ten to why we think the cur­rent draft isn’t a solid, en­force­able regulation. We’ll be sub­mit­ting our anal­y­sis and pro­pos­als in early De­cem­ber. We’ll also re­sub­mit, in a dif­fer­ent for­mat, the ra­tio­nale for per­cent­ages we be­lieve are ap­pro­pri­ate and why we be­lieve them to be so. So we’re sep­a­rat­ing the plain tech­ni­cal sub­mis­sions we’re mak­ing from the tech­ni­cal/ eco­nomic/so­cial ones. We hope to be able to dis­cuss our sub­mis­sions with DAFF some­time in De­cem­ber so the Min­is­ter could ap­ply his mind to the mat­ter later this year or early in 2016. It’ll be a great day if we can bring this mat­ter to res­o­lu­tion.

Our con­sumer re­search re­port is still not fi­nalised. This re­port is based on both qual­i­ta­tive and quan­ti­ta­tive re­search, which had been mixed up in the work pre­sented so far. A re­vised re­port should be avail­able by the end of this year, and we’ll then de­cide how best to share this in­for­ma­tion with our var­i­ous stake­hold­ers.

Our ef­forts to get ac­cess to the raw data which we be­lieve DAFF has used to de­ter­mine the lev­els in the cur­rent draft regulation con­tinue to be stymied by the three in­sti­tu­tions that were in­volved in the work, namely the ARC, the Univer­sity of the Free State and the Tsh­wane Univer­sity of Tech­nol­ogy. I am still puz­zled why they’re so scared to give us the data be­hind the pub­lic re­ports that they’ve is­sued. Bizarre. Any­way we be­lieve in our le­gal sys­tem and their at­tempts to hide should come to nought.

OIE

Ithink I’ve ad­vised read­ers that I’ve re­cently been tasked by the In­ter­na­tional Egg Com­mis­sion to rep­re­sent their in­ter­ests on the An­i­mal Wel­fare Work­ing Group of the OIE. This group deals with all species, not only poul­try, and we’re work­ing to­wards the next OIE global con­fer­ence on wel­fare which will be held in De­cem­ber 2016. Sep­a­rately, I was asked di­rectly by the OIE to try deal with some dif­fi­cul­ties in the cur­rent pro­posed stan­dards for broiler slaugh­ter wel­fare. I spent some time in Paris last month, and am happy to re­port that a com­pro­mise po­si­tion that sat­is­fies the needs of the EU and of the rest of the world was reached af­ter some hard bar­gain­ing. This com­pro­mise will al­low us to con­tinue with our Ha­laal com­pli­ant slaugh­ter prac­tices, but there will be some fur­ther out­comes-based mea­sures that’ll have to be im­ple­mented once the pro­posal is adopted. It’s pos­si­ble this new sec­tion of the OIE Code could be adopted next year in May, but it’s more likely to be adopted in May 2017. Once there’s a pub­lic text avail­able it’ll be shared with all broiler mem­bers.

Govern­ment In­ter­ac­tions

We’re work­ing on our sub­mis­sion for the pro­posed abat­toir sec­toral de­ter­mi­na­tion, which should be made in early De­cem­ber. I ex­pect the process might have a few it­er­a­tions be­fore it’s com­plete, and it’s also pos­si­ble that the Depart­ment of Labour might de­cide not to im­pose such a de­ter­mi­na­tion.

Gen­eral

Iattended the lat­est As­tral re­sults pre­sen­ta­tions and found it an in­ter­est­ing way to in­ter­act with the in­vest­ment com­mu­nity. If any pro­ducer would like SAPA to at­tend their pub­lic meet­ings, we’re more than will­ing to at­tend and if re­quired, an­swer any spe­cific ques­tions.

A new ini­tia­tive by Cit­i­zens in Part­ner­ship with Govern­ment is to de­velop a South Africa Day, mod­elled partly on Aus­tralia Day. This is an op­por­tu­nity for all South African busi­ness, of all sizes, to cel­e­brate our 'South Africaness'. The idea was launched last month and the first such day will take place at a date to be con­firmed next year. When I have more in­for­ma­tion I’ll share this with you as an op­por­tu­nity for all to get in­volved in our present and our fu­ture.¡

Re­gards un­til next month. Kevin Lovell CEO

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