From the Desk
Practice, politics, research and trade
This past month was marked by the Brazilian meat scandal. Trade in animal products around the world relies on trust between veterinary authorities of the countries involved. Can DAFF still trust the veracity of the certificates attached to Brazilian meat imports? The scandal involves a small number of Brazilian meat plants, and while there’s no indication of widespread corruption in the Brazilian system, it’ll be easy to be distrustful of all Brazilian products from now on. We have to look at this scandal and consider what it is that we need to do to maintain and improve the perception of our own meat and egg industries.
The correspondence around our revised Code of Practice makes me think that we’re not seeing the world in which we live as much as the world in which we produce. Sometimes, it doesn’t help to be right if others don’t accept that what one does is right. The brining regulations are a good case in point - a practice that worked to consumers’ benefit is limited because people didn’t think it was in the consumer interest. A gross lack of knowledge and understanding doesn’t prevent decision makers from making decisions, even if these are wrong or bad. I hope that Brazil develops a transparent way for its trading partners to believe in its systems again.
An urgent meeting was called by DAFF to deal with the concerns of industries over the appointment of assignees in the poultry meat and egg, grain, industry and vegetable industries. The Agricultural Products Standards (APS) Act allows for the appointment of assignees to do work on behalf of DAFF. This doesn’t mean assignees should be appointed if there’s no demonstrated need for their appointment - probably the main concern of all the affected industries. Extra costs are being added to agriculture for no good reason. Some officials at DAFF don’t seem to understand the concept of public service. I hope that DAFF considers that reason should prevail and that this matter will not involve DAFF in unnecessary court action by any number of parties. We have written
further letters to DAFF on this matter and we hope that a sensible solution is in the offing. We’ll keep you posted on developments.
The documents on the assigneeship from DAFF lead us to believe that our advice to you on exporting products needs some updating. A letter will have been written to members before you get to read this edition of the Bulletin. If anyone didn’t receive the letter, please contact me directly.
We had an allday session in Parliament last month, presenting to the trade and industry Portfolio Committee. All presentations are available if desired. AMIE continued with their approach of disinformation and deviousness. They now say they accept we’re a competitive producer, but that the problem is elsewhere in the value chain. And where do they sell their goods? They also say the problem is that we don’t export to the EU – in other words, that they should be allowed to buy dumped products while we, or they, should be allowed to export fairly traded goods. Our best export markets are likely somewhere other than the EU, although we’d be happy to have the EU as one of these. We’ll never be happy to countenance dumping, from whatever source.
It seems the Portfolio Committee didn’t see through their lies and disingenuousness. It was also telling that the staying power of the committee was insufficient for them to keep on track for the whole day. The Democratic Alliance (DA) members were more interested in trying to show off their mastery of the matter than listening and learning, and infantile drivel on selling brine as meat and such other tosh were gleefully trumpeted. There were attacks made by the DA that our employment data was false without the faintest understanding of the methodologies used or very basic principles of statistics. Sometimes one despairs. Perhaps we should not vote but be given darts to throw at a board since a good number of people we account to and rely on for support have little interest in understanding the issues at hand.
The submissions made by the National Agricultural Marketing Council to the Parliamentary Committee were quite illuminating where, regardless of the economic model used, it was clear that South Africa benefits from a vibrant local industry. Imports of chicken are bad for the country. Period.
The Chief Commissioner of ITAC made an important contribution to the deliberations of the Portfolio Committee when he pointed out that tariffs alone will not save the industry. This is true as we have the EU trade agreement, and importers and exporters have shown considerable flexibility with pricing and sourcing strategies. The real answer is that we have to stop the dumping - and much more than tariffs are required to do that.
The Portfolio Committee questioned us as to our level of transformation. It was telling that they didn’t ask this of AMIE, and the misunderstandings about transformation persist. Clearly SAPA, which is its members, cannot transform the businesses of its members. What we can do though is help with systems and structures that allow the industries to transform themselves. Sometimes I wonder how we’re going to get clarity on this distinction into the public discourse so pressure can be brought to bear on SAPA to do what it can - and should do - and not what it can’t. Any offers of help will be appreciated.
Fortunately there are a good number of officials within government who are alive to the real issues and the real facts and are working hard at dealing with our issues. Will it be in time?
Research and related matters
The University of Pretoria and the Board of SAPA have agreed to part sponsor the costs of the Research Chair in Poultry Health and Production from 2018 onwards. The→
National Research Foundation is now preparing submissions to cover the remaining costs of the Chair. We’ve benefited greatly from the creation of the Chair, a project made possible by the levy. It would be bad for the long term health of the industry to lose the expertise that we’ve created – and continue to do so.
The poultry task team is being used as a means to try push the conversion of the PDMA into a full public private partnership, an idea that was always viewed positively by DAFF but not acted on. I guess their workload makes it hard to look at things like the PDMA, but an effective partnership will actually ease their workload, not add to it.
We’re also, as active members of the Animal Health Forum (AHF), looking at ways of formalising some of the work of the AHF to achieve more as a general joint partnership between industry and the state, not simply poultry and the state, which is what the PDMA is. Ziyanda will be taking this idea further and will report to you all in the near future.
Then, the last part of this engagement with the future of the industry is to get the Research Chair in Risk Analysis filled. This position has had funding allocated to it from the NFF and DAFF, and is going through the process of selecting the university, which will be followed by the selection of the candidate process. Hopefully we’ll have something to report by year end.
There’s been so much talk about competitiveness now that it’s hard to stay focussed. We don’t as yet have an egg industry benchmarking exercise in place, although Charlotte is working on this and data supplying volunteers are asked to contact. However, the broiler version of the exercise, run jointly by the University of Wageningen and BFAP, has been through its second iteration and the data should be out soon. The first round showed clearly that, even with our maize and soya bean oilcake prices being higher than our competitors, we can produce slaughtered whole chickens for less than any of the EU countries surveyed. So how can this mantra of our lack of competitiveness persist? Even if we didn’t have the devious machinations of AMIE involved in the discourse, I think there’s a deep-seated belief among South Africans that we aren’t as good as the ‘other’. For us to go forward, we need to believe in ourselves. We also need to focus on our main issue, which is that we are a developing country and, in common with all other developing countries, what we need is real change. Sometimes, I think we focus too much on the ‘whiteness’ issues and not enough on the developing issues. Doing that would make it easier to understand the commonalities we have with other countries in Africa, rather than our differences with them.
Last month, I wrote with hope that there will have have been Ministerial action on the task team omnibus. Well, we’re still waiting and rely more than ever on DAFF to actually come to our assistance with concrete actions, rather than promises of action.
The task team will meet again in April, and is now working on some of the second phase issues which are designed to revitalise the industry. These will, of course, not be effective if we don’t first stabilise the industry, for which we need DAFF. At the April meeting, it was clear that all parties, with the exception of DAFF, had devoted considerable time and resources to the problems of the industry. We’re quite sure that DAFF has the capacity to assist the industry and the
skills to do so; if only we could assist in the better coordination of their efforts.
One of the tasks we’re busy with is the determination of likely price effects should maize exports be managed and a higher stock-to-use ratio of maize maintained - drought years excepted. This isn’t a straightforward analysis, and will have a number of implications for consumers. The main one is that, over time, food will be cheaper and speculators will have less to speculate about. You can well imagine that such parties are terrified.
Good news is that the USA anti-dumping sunset review has finally been initiated. As the duty was due to expire quite soon this was a bit of a close shave. Now the process of hearing the other side starts. The deal with the US when we made the AGOA concession was that they could not use the quota in any attack on the duties but may continue to use any other means of attacking the duties that might properly express their case. As the fundamental problem is the Enron accounting that they use (claiming that whole birds have a real cost but that portions have no real cost, only an allocated cost), we look forward to them demonstrating the existence of fairies. In the last review, they also chose not to cooperate with the investigation and we’re not sure if they’ll choose to not cooperate again. Either way, we’ll do our best to ensure that the duty is renewed for a further five year period. As you know, the quota hasn’t been fully utilised so far, with the first cycle being 15 months to accommodate the uncertainties around the date of implementation of the quota. We remain committed to our agreement on the volumes.
We also remain committed to correct the weakening of human health standards to accommodate the lower Salmonella standards applicable in the USA. The DAFF answering affidavit has now been received, and we’ll shortly respond to that. This means that the scheduled court date of 6 April will now be changed. The solution is, of course, for reason to prevail and for DAFF to deal with its decision in a proper manner. The recent HPAI outbreaks in the US, some of which have been in broiler breeder flocks, would suggest that their biosecurity→
is not as strong as they want us to believe. Not that I think any of you should gloat: rather I think you should be sitting down with a pen or pencil and considering what it is that you could improve to minimise the likelihood of the disease ever breaking out in South African chickens.
The amended submission on the EPA safeguard will long have been submitted by the time you get to read this letter. ITAC said in Parliament that it’s their intention to finalise their work and submit a recommendation to Minister Davies by end May.
To strengthen the submission, we’ve been working hard to provide ITAC with balanced data on the real effects of changes in the maize price on production costs and margins earned. The maize price is very important to our industries, even though its effect on price and margin are in the lower single digit numbers. The importance is simply because both the egg and meat industries are low margin businesses and a small change in overall margin can have a major impact on the survival of a business. It is important, but not as dramatic as many commentators would like us to believe.
The Avi Africa programme is still being finalised as speakers confirm their attendance. We’ll be updating the programme on our website as changes are confirmed for those who are interested in seeing what’s on offer. The annual report is nearly complete, and will be sent to you well within the time limits determined by the constitution. Which brings me to the point that very few requests for changes to the constitution have been received to date. It is the right of all members, not only committee members, to ask for changes to the constitution. Please read the constitution if you haven’t already done so, and send your suggestions for changes or also express your concerns, such as they may be.
We’ve met with our auditors to conclude the annual financial statements for 2016 and all is acceptable. There remains some uncertainty with debtors, and the financial position of the Egg Organisation is a cause for concern - more for us than it is for the auditors, as they’re looking at SAPA as a whole while we look at the two subsidiary bodies and the main body almost as though they are separate companies. The need for the statutory levy for the Egg Organisation remains pressing.
The Broiler Organisation meeting scheduled for 23 April had to be postponed because of our presentation to Parliament and will now be held on 19 April, the day before the Board meeting.
Charlotte will report on the most recent of our provincial meetings held in the North West Province. Three down, six to go. Of course a meeting is merely the start; now we need regional bodies to be formed.
I’ll be attending the IEC meeting while this letter is on its way to you. I will also be attending the first of the two IPC meetings in April. The Animal Welfare Working Group (AWWG) of the OIE had a teleconference last month, and a key outcome is that the revised definition of the meaning of animal welfare prepared by the AWWG will be taken forward to the General Assembly of the OIE in May. I will circulate the proposal once it has been sent to all country members of the OIE.
The global standards on layer welfare that are currently being drafted (with me as one of the drafters on behalf of the egg producers of the world) are going to take a bit longer than anticipated, as the Code Commission of the OIE ran out of time to review them in February. They will now do so in September this year and will only go out to the countries after that.
The ad hoc team has, in the meantime, updated the draft slightly.
The EU report on their visit to South Africa to look at systems in place for the ostrich industry was illuminating as to what they will be expecting of us if we want to export to them. Much of this dealt with ways of being sure that claims made by DAFF and the ostrich industry could be easily verified. Ziyanda will be working hard this year to improve the rigour of the avian influenza monitoring system that we use as a support aid to DAFF. I ask that you all assist her in this task. It needs all of us working towards the same end point if we are to succeed.
Regards until next month, Kevin Lovell CEO.¡