From the Desk
Operation Phakisa, Parliament, imports and levies
The industry lost another of its stalwarts last month with the untimely death of John Peace who was for many years an institution in the egg industry. You will find an obituary in the news section, but I ask that you all spend some time to reflect on his passing. In keeping with his character he chose to have a celebration of his life at one of his Spur restaurants, rather than a formal funeral service, attended by all of his family, friends and colleagues.
It was our turn to present to the agriculture portfolio committee of Parliament (PPC) at the beginning of March with a presentation to the trade and industry PPC scheduled for the middle of March. Our presentation to the agriculture PPC is available to readers if you like, as will be our presentation to the trade and industry PPC.
SAPA attended the Agrisa commodity chamber meeting at the end of February and also participated in part of their commodity conference. We also met with AFASA to hold discussions with their new president Dr Vuyo Mahlati, who has replaced Mike Mlengana, our current DG of DAFF. We remain hopeful that the two main unions in agriculture, Agrisa and AFASA, can find common cause and form one consolidated union that can truly represent the majority of farmers in our country. Doing so would render the somewhat confusing debate as to what sort of general commodity organisation should exist to serve South African agriculture easier to resolve. Our main perspective is that it’d make sense to be able to have a body - or bodies - that can handle matters not exclusively within the remit of SAPA or any other individual commodity organisation. For this to work, this body needs to be seen as politically unified. It’s unrealistic to expect that, in the current state of our national development, any such body could be apolitical. We have a way to travel in this journey.
SAPA was invited to the official launch of Operation Phakisa. The Phakisa work streams were developed over a five week period, with Charlotte representing the interests of the poultry industry. As the work “Phakisa” means ‘hurry up’, five weeks did seem like a long time to get to a final plan. This final plan is a good document and is available to all readers of the Bulletin. The launch speech was given by President Zuma, who focussed not only on the plan for Phakisa itself but also his expectations of resolution of the land question. It appears as if delivery of change, which is what Operation Phakisa will bring, doesn’t have an entirely consensual view within parts of the state apparatus.
At the service delivery forum of Minister Zokwana held on 3 March, questions were raised about the statements being made by the President. The Minster assured all present that land reform will be done within the constraints of the constitution. As a country, it’s clear that we haven’t explored all the options available to us that do comply with the constitution, so the opportunity for different mechanisms of land access and ownership might well be tested in the next few years. The best I can say is that all of us need to trust in the constitution and allow novel means of redress to be tested in terms of their permissibility. This is obviously separate from the issue of practical production reform. So what could that mean for us? Well, I think it should obvious to all that our economy still has a lot more change required before it can be said to have broadened access to the great majority of our people. There are definitely opportunities to broaden access, with appropriate government support, in the field of poultry production and also in the area of poultry meat and egg branding and marketing. Perhaps it is only in processing, packing and slaughtering that it makes sense to keep the current abattoirs and egg graders and packers pretty much as they are? If change is to be productive - and even if disruptive, is not destructive - we are going to need to work closely with government in a true partnership, each bringing its own strengths and capacities to the table. We are moving in that direction but we aren’t there yet.
Minister Zokwana was quite clear in his address at his service delivery forum that we would be supported by the state and by the governing party in resolving our current travails in the broiler industry. This is an important public statement that now needs to be backed up by action, some of which is easy to do. An example would be to advise all the countries who have the right to trade with us that we will verify their claims of freedom from HPAI whenever such a country declares itself free of the disease. This is some of them do to us - entirely permissible and equitable treatment is generally to be supported.
Several of the industries affected by the assignation of the responsibilities of the DAFF inspectorate are unhappy with the way in which the process has been driven and the costs that are likely to be incurred. I believe that DAFF is aware of the issue and will try to resolve the unhappiness before it escalates. We’re active in this process and will report back when we can.
AMIE’S call for Parliament to investigate our industry has been acceded to, so we’ll be using this opportunity to present our side of the story in the middle of March. It is AMIE itself that proudly says that their imports are sold for similar or higher prices than our equivalent products so they should acknowledge that there is no consumer benefit to their actions - obviously they prefer to ignore the logical disconnect in their argument. The most telling part of the argument is that imports take away jobs on a net basis and we create them. What does South Africa need most? Jobs.
SAPA has been heavily exposed to the media this year with Marthinus Stander becoming much more visible on our media channels, broadening the SAPA message. Much of the exposure remains positive although the deep seated cultural cringe of many South Africans still allows them to think that the ‘other’ must be better than us when it is actually the opposite that is true.
The Fair Play initiative has had its own media briefings to which we, as well as others, were invited. From both the parliamentary and media sets of engagements, it’s clear that the narrative that we are not competitive still persists to an extent. ITAC has determined that we are suffering due to imports from Europe. The facts of the matter are that we can produce slaughtered whole birds for less than they can; we are more competitive than the countries that currently cause the most harm. We can be more competitive if we could pay less for maize and soya bean oilcake, but grain prices are not the main problem facing the industry; dumping is.
The dti led task team continues to meet and his issued an omnibus of desired actions to various Ministers for their respective action. We hope that you’ll have read of some of these actions long before this letter gets published, for without urgent action the situation will rapidly worsen.
ITAC is working on our trade applications and we look forward to resolution quite soon in the case of the EU safeguard. The apparent unwillingness of the EU to accept the rule of law and challenge what they perceive as incorrect action by ITAC means that we should be ready for some ‘left-field’ attempts to kibosh the safeguard action.
In discussions with one of the major producers of layer day-old-pullets, we’ve realised the practical difficulties that these companies will face in collecting the levy. An alternate offer has been made, which will now be discussed with the other layer breeder companies. On the basis that we resolve this issue, we still need producer support. Many of you haven’t responded to Charlotte’s call for support. Please do so. The current brouhaha over the costs of the DAFF assignment of inspection services is a case in point. If DAFF has its way, the egg industry will be paying about 1,8c per dozen for an independent party to do the work that DAFF used to do→
for no cost. Yet we struggle to raise 1c per dozen from producers for a levy that would allow us to properly defend your interests! Doesn’t seem sensible to me.
We continue with our Avi Africa planning and the programme continues to develop. If all the invited speakers do agree to take up their speaking slots, I think the programme will be particularly interesting. There’s still some exhibition space available although it’s filling up quite fast. If you haven’t yet booked your space, I suggest you do so soonest.
We’ll meet with the University of Pretoria in early March to discuss the partial funding of the Research Chair position. As mentioned last month, we’ve approached the National Research Foundation who’ve said they need to know the whole funding mix before submitting our application to their approvals committee. They’re keen to work with us to keep the Research Chair in Poultry Health and Production alive.
There’s another planned export trip in March, this time to West Africa. We’ll report back next month should it come to pass. As good Africans, we should want to work with partners in other African countries to help them create and grow their own egg and broiler industries. We shouldn’t seek to be a ‘mini EU’ if we want our position within Africa to be seen positively.
After some careful reassessment, the broiler production model has been amended taking into account better breeder and hatchery data. This means that the size of the industry has been downscaled slightly. I ask that you look at the latest set of broiler statistics to get an idea of what the changes are in terms of the different parameters. If there are any hatcheries and breeders not supplying data to Leading Edge, please start to do so at your earliest convenience so that the quality of the data we provide is further improved. We’re now working on a simple model to explain the totality of what’s produced in the broiler value chain so that wacko ideas on the size of the import industry in total and in specific subsectors can be addressed. Once all of this modelling is complete, it’ll be published for general use. It might interest you to know that imports of bone-in portions are actually close to 25% of the total market in bone-in portions and that this amount has a major effect on the price formation of the whole broiler industry.
The Gauteng regional meeting was held in midfebruary, the second meeting to follow the one held in KZN last year. Attendance was much less than in KZN, although there was an opportunity for some smaller farmers to talk about issues and one fairly new farmer to explain his successes in moving from a small producer to quite a decent sized one. More provincial meetings are being planned, and I hope you’ll try attend these held in your province. Please ask Dr Charlotte Nkuna for more details.
There’ve been some rumblings from members about the revised SAPA Code of Practice to be put for approval at Congress this year after more discussions with the two organisations. It’s a pity members aren’t more actively involved in these discussions from the start so they can help steer the discourse in a manner more suitable to their needs. The understanding of animal welfare is a moving target as new knowledge and new interpretations of knowledge come to bear on the team working on the draft. We need to position ourselves as engaged with the topic as it’ll never go away for as long as you are all farming. The work of the SABS to establish a poultry meat and eggs welfare code is also ongoing.
Charlotte has signed up the first few contractors for our GDARD Tshwane fresh market processing project. She is also close to appointing a project manager to oversee the construction phase so as to ensure deadlines are met and quality is assured.
The current crisis in the industry is proving to be a boost for our transformation efforts, with a number of companies talking to us with some novel ideas on how to broaden the production and market access base. All of these ideas are going to firstly need a stable market and most likely some government support, but it’s exciting innovation is coming to the fore in difficult times.¡
Regards Kevin Lovell CEO.