From the Desk An industry in the spotlight
The media exposure of our broiler industry in particular, and the industry in more general terms, has continued. Presentations to Parliament by the dti have been made; multiple press, radio and TV interviews have been read, heard and seen; and the FAWU- led public marches have been well covered. By the time you read this, the dti-led poultry task team will have met again. We were also able to present our case to ITAC as to why the safeguard against the EU should be higher. Much work is still to be done before the final decision is made hopefully within the next two months.
The end of January meant the end of the road for over 1300 employees of RCL - workers and management. Now, while we’ve lost many more employees than 1 300 in the last few years, it has never been so many at one time, and not perhaps in such a public way. As mentioned before, it isn’t only the workers who’ve gone but many of the farms as well. For those who know the area, the Mpumalanga township in Hammarsdale has had a tortured history for decades. The EU has added more suffering to the lives of the people who call Mpumalanga home. I can’t see chicken production coming back to the area, other than what still remains that is, but I really hope that some other industries will be encouraged to move there to compensate for the RCL job losses.
Final import numbers for 2016 were 560 000 tonnes of all poultry products, and 240 000 tonnes of bone-in portions. This means that total imports are about 1 and 1/3 the size of our largest producer, Astral, and bone-in imports are larger than the total production of our third largest producer, CBH. Not small by any means, with R 5,5 billion in total imports at the free on board level and bone-in portion imports of R 3,6 billion at the free on board level. Add freight, other logistics costs and margins, and we’re talking about R7 billion plus industry. So the next time someone tells you that we’re giving the small import industry a hard time, please remind them how big the import industry actually is.
AMIE have called for Parliament to investigate our industry, and should Parliament agree to this
request, we’ll surely also have an opportunity to present our side of the story. It strikes me as odd that AMIE wants South Africa to believe that they can only be successful if they have access to dumped products. Surely they’re better businesses than that? ITAC have demonstrated that they’re reluctant to apply punitive duties of whatever type, so all AMIE members have to do is succeed on a level playing field. Maybe that’s too hard for them.
Government has clearly acknowledged that we have a crisis - and no longer simply problems. You might ask why it’s taken so long? Well the answer is quite clear: governments all around the world don’t have the resources to tackle all of the problems they face, but they are able to allocate resources to deal with a crisis. That’s where we are now in the process.
Much of the media is reflecting a relatively balanced assessment of the industry, although the misconceptions around efficiency still prevail. The simple truth is that most of the harm we’re currently experiencing comes from EU exports of bone-in portions. Now, we can produce slaughtered whole birds for less per kilogramme than any of the EU countries that are surveyed by the University of Wageningen, so it should be pretty obvious that we’re more economically efficient farmers than those in the EU. Perhaps this isn’t obvious enough to some in the media, or some commentators and economists who have a limited understanding of the sector and the issues at hand. Our issue is mainly that countries dump their surplus and their waste on us. In fact, almost nothing that comes here is made for South Africa, with only about 3% being what would normally be seen as prime products, namely whole birds and breast meat. The rest is stuff that people don’t want to eat in the country of manufacture.
Another issue I find strange - and that the media doesn’t acknowledge - is the question of the rule of law. The USA has been determined by ITAC to be a dumper of bone-in portions, as it has by the Mexican and Chinese trade authorities. Until such time as these rulings are overturned by a local court in any of the countries or by the WTO (who did rule against the way that China approached its investigation, not against the dumping finding itself and which investigation has been corrected by China), the USA remains a dumper. In fact, in the AGOA deal, the whole idea was to allow the USA to dump an agreed quota of bone-in portions. The EU, or to be more specific the three biggest exporters from the EU at the time, were found by ITAC to be dumpers. ITAC also found that Brazil was dumping whole birds and breast meat a few years ago, although no duties were enacted; the MFN tariff was increased instead. All this means is that if you believe ITAC is wrong, you should take the decision on review. Either that or be honest and accept that you are a dumper. There might be some people who still think Oscar Pistorius isn’t guilty of murder, but all the Courts in the land have determined that he is. That’s how law works. That’s what the rule of law means: respect those decisions, don’t deny them and be dishonest, which is what the EU seems to think is the right thing to do. Odd, wouldn’t you say?
The HPAI bans against the seven EU countries continue, with wild bird cases reported in Spain and the Republic of Ireland, meaning that the threat of further spread in poultry remains high. In fact, the EU free range producers sit with a difficult position at the time of writing as they’re about to reach the 12 week limit on bird confinement. After
this, they may no longer sell their products as free range. Hopefully, they’ll be granted an exemption by Brussels as the confinement is for good reason, namely to reduce the risk of further disease spread.
We’ve submitted the levy surplus trust application to the NAMC and they’re processing it. We’ll keep you updated as to progress.
Our statutory levy application for the egg industry has also gone to the NAMC, even though there are a few issues on the collection point not well resolved. As there are multiple voices within the egg industry on the need for, and benefits of, a levy for the industry, we ask that all of you in favour of a levy let the NAMC know when they call for inputs. It won’t help if only those opposed to shared and equitable funding of the industry body raise objections while the voices of those in favour aren’t heard. Once the OIE welfare standards for layers are approved, I foresee quite some pressure being brought to bear on local egg producers. The time to prepare is now.
Avi Africa planning continues and a draft programme is now ready for those who’d like to see it. There are, at the time of writing, still some exhibition stands available for hire and early discounted registrations are now open. Please take advantage of this opportunity to be involved in the regional poultry industry.
We’ve met with the National Research Foundation (NRF) to see if funding for the Research Chair in Poultry Health and Production that SAPA established four years ago can be sourced. Our commitment to funding the Chair expires this year, and we’d be foolish as an industry and a country not to continue with the work that the Chair and her students have done and continue to do. If we want to stay at the top of the farming efficiency stakes, local solutions to local problems continue to be needed.
Related news is that the calls for filling the Research Chair in Sanitary Risk Analysis have gone out, with a deadline for submissions by end March. This Chair will be funded by the Department of Science→
and Technology, the NRF and DAFF, with industries contributing to research costs. We need enhanced SPS and general risk analysis capacity in the country within the state system and in the private sector if we are to maintain and improve safety standards for local consumption as well as being able to access some export markets.
Ziyanda is hard at work developing a PDMA business plan for submission to the Board, and Charlotte and I have met with her to discuss this work. As she is expected to drive this initiative, we expect her to explain to us what it is that should be done. This is a great opportunity to further develop the PDMA as well as quite a bit of pressure on her to hit the ground running, so to speak. Please let her know what your ideas and expectations are for the PDMA so that she has as wide a set of views as possible to consider as she develops the business plan.
A planned export visit to the Middle East was called off at the last moment. Working with the International Poultry Council on some of these issues, it’s clear that even the big exporters such as Brazil, the US and the EU find it difficult to interpret the requirements of some Middle Eastern markets. As these markets are likely to remain, if not grow, we need to be able to comfortably satisfy the import requirements. By comparison, markets in Africa could diminish as local production rises. That’s what Africa wants anyway.
I met with one of the QSR companies (fast food restaurants) last month to discuss general issues and also to explore how they could join SAPA as associate members. I’m still struggling to understand what benefit we can offer to associate members and ask that any reader who can help me with my uncertainty give me a call to try to clear the fog.
Our annual audit is underway at present and so far no issues have come to the fore. In terms of our new constitution, we have to find another auditing firm for 2017. A sub-committee of the Board has been set up to select new auditors. Changes to the regulations around the use of audit firms require that compulsory rotation of auditors is needed. We’ve been happy with the services of the current auditors, BDO, and the rotation should not be seen as a comment on the quality of their services to us.
Charlotte continues to work on the Tshwane fresh market processing project. There’s still some administrative work to be done to ensure that the GDARD funds we have are properly utilised, but all indications are that the project will be ready in a few months.
I attended the Gauteng government’s West Rand Development Forum last month in the presence of almost the entire Gauteng government cabinet. Apart from the interactions with farmers, I was able to broach the subject of eggs in school feeding schemes with MEC Lesufi. He expressed an interest in following up on the idea and I hope that Gauteng will be the second province in the country (after KZN) to add eggs to their school feeding programmes.
There’s a Canadian system of egg sexing which is apparently close to market and which I will be discussing with the Canadians at the upcoming IEC meeting in April. This will allow all layer hatcheries to hatch only female eggs and perhaps use the male eggs for vaccine production. The development of this technique, which is based on different light wavelength sensors, has been quite slow and we don’t yet know what the cost of its use will be. Well, it now seems as if there are other approaches to solving the problem that could be coming to South Africa. I have had initial discussions with the local supplier of this alternate approach and, if it works and costs as little as claimed, it could be a good solution for all layer and broiler farmers as it can sex broiler eggs as easily as layer eggs. The killing of male chicks in the layer industry is a great environmental cost and also a considerable reputational problem. Affordable solutions are to be welcomed.
I was unable to attend the Astral awards ceremony last year as I was travelling abroad at the time and so attended a smaller version of the ceremony last month at which function I was honoured by Astral for what they considered to be ‘going the extra mile’. I am deeply appreciative of the recognition.
Regards until next month, Kevin Lovell, CEO.¡