From the Desk

The Poultry Bulletin - - CONTENTS -

Board changes, egg de­vel­op­ments, Avi Africa, trade and dump­ing

Last month, I started with news of the break­ing of the Brazil­ian meat scan­dal in the me­dia. What has proved re­mark­able in this mat­ter is how the Brazil­ian gov­ern­ment pulled out all the stops to deal with the cri­sis. The Pres­i­dent of Brazil was di­rectly in­volved, call­ing the heads of gov­ern­ment of key cus­tomers, invit­ing all Am­bas­sadors in Brasilia to a quickly ar­ranged braai, and send­ing his Min­is­ter of Agri­cul­ture on a whistlestop tour of the world to their ma­jor mar­kets. By do­ing all these things, and do­ing them so quickly, the harm to Brazil’s im­age has been con­tained. That doesn’t mean of course that there hasn’t been a prob­lem, but most com­men­ta­tors now seem to ac­cept that this is lim­ited in na­ture and has been fully un­cov­ered. Master­ful work, if I may say so.

This month also brought a res­o­lu­tion from one of our egg or­gan­i­sa­tion mem­bers which could lead to the dis­so­lu­tion of the Egg Or­gan­i­sa­tion af­ter our up­com­ing AGMS and Congress. I re­ally hope it doesn’t come to that.

Egg mat­ters

There will be a lot more de­tail on egg mat­ters in Char­lotte’s let­ter, al­though there are a few items I’d like to raise. Firstly, ev­ery­one knows that the fund­ing of the Egg Or­gan­i­sa­tion has been prob­lem­atic since the ces­sa­tion of the levy. One of the larger mem­bers has now tabled a res­o­lu­tion for dis­cus­sion at the Egg Or­gan­i­sa­tion AGM, and there­fore at the Broiler Or­gan­i­sa­tion AGM and the Congress that fol­lows.

This res­o­lu­tion will lead to the dis­so­lu­tion of the Egg Or­gan­i­sa­tion at some time in the fu­ture. This res­o­lu­tion needs stren­u­ous de­bate and I hope all Egg Or­gan­i­sa­tion mem­bers will make the ef­fort to at­tend the AGM to dis­cuss such an im­por­tant mat­ter. We need more egg mem­bers. Please join up again to make this a bet­ter body at your ser­vice. For those who are cur­rently mem­bers, please note that the mem­ber­ship for­mula is based on the eggs that you sell, not those you farm, so if any of you are buy­ing in eggs from con­tract farm­ers or from other pack­ers, these num­bers need to re­flect on your monthly re­turns.

As the two or­gan­i­sa­tions are not in­de­pen­dent bod­ies in their own right, the poor fi­nan­cial per­for­mance of the Egg Or­gan­i­sa­tion af­fects the fi­nan­cial sta­tus of SAPA in­di­rectly be­cause the Broiler Or­gan­i­sa­tion and SAPA it­self carry the deficit that ex­ists in the books of the Egg Or­gan­i­sa­tion. This re­duces the re­spec­tive re­serves of these or­gan­i­sa­tions, but one can’t per­sist with a con­tin­ual loss in the Egg Or­gan­i­sa­tion with­out even­tu­ally putting SAPA it­self at risk.

Right now, the Egg Or­gan­i­sa­tion has a num­ber of threats on the hori­zon. First and fore­most is the low mar­gins be­ing earned. Then the is­sue of the as­signees is likely to add a cost bur­den that is dif­fi­cult to prop­erly quan­tify. There is also the wel­fare is­sue to con­sider. Char­lotte is or­gan­is­ing three meet­ings of egg pro­duc­ers, not only mem­bers, all around the coun­try so that the re­vised SAPA Code of Prac­tice can be de­bated be­fore the up­com­ing AGMS and Congress. Al­though wel­fare mea­sures should be based on sci­ence, they also have to take opin­ions and so­cial pres­sures into ac­count. Please make a point of try­ing to at­tend these meet­ings. The Broiler Or­gan­i­sa­tion ac­cepted the draft Code of Prac­tice at its most re­cent meet­ing.

Broiler mat­ters

The Broiler Or­gan­i­sa­tion Com­mit­tee met on 19 April, the day be­fore the Board meet­ing. As men­tioned above, the com­mit­tee ap­proved the draft Code of Prac­tice as it ap­plies to broiler pro­duc­ers and broiler breed­ers. Jake Mok­wene was con­firmed as the new BO mem­ber on the Board to re­place Jus­tice Zotwa un­til the ris­ing of Congress, and Andy Crocker will re­place Theo Del­port on the BO Com­mit­tee un­til the ris­ing of the Broiler Or­gan­i­sa­tion AGM. Theo’s place on the Board will be taken by Gary Arnold un­til the ris­ing of Congress. Ma­bel Motl­hale and Jaco Viljoen will be­come al­ter­nate mem­bers to the Board un­til the ris­ing of Congress.

One of the ve­teri­nary com­pa­nies held an in­ter­na­tional con­fer­ence in Greece last month. For­tu­nately for us, one of our SAPA mem­bers was at the meet­ing and noted pro­duc­tion cost in­for­ma­tion be­ing pre­sented placed South Africa in the wrong place on the rank­ing and was in­cor­rect. Through rapid in­ter­ven­tion form our side, the in­for­ma­tion was re­tracted and cor­rected. Please re­peat af­ter me: we are one the most com­pet­i­tive pro­duc­ers in the world and those coun­tries who pro­duce at a lower cost than us do so by hav­ing ac­cess to maize and soya at lower prices than we do - not be­cause they are much bet­ter farm­ers. That said, we should con­tinue to im­prove with our farm­ing skills while we try cor­rect is­sues in the grain mar­kets that raise our pro­duc­tion costs un­nec­es­sar­ily.

Trans­for­ma­tion mat­ters

At last we have some im­por­tant news to cel­e­brate. Min­is­ter Zok­wana has ap­proved our trans­for­ma­tion trust in or­der for us to make use of the levy sur­plus. To our knowl­edge, this is the first such ever­green trust to be formed and marks a sig­nif­i­cant step for­ward in our trans­for­ma­tion jour­ney. Both DAFF and the NAMC have ac­cepted the draft trust deed as sub­mit­ted, so what re­mains to do now is to regis­ter the trust; have its tax ex­empt sta­tus granted; and get the monies trans­ferred into the trust. To regis­ter the trust re­quires that the trustees are ap­pointed. The Board has ap­pointed the four trustees who will rep­re­sent SAPA, be­ing three small pro­duc­ers (Wil­lie Bosogo, Aziz Sul­li­man and Ach­mat Brinkhuis) and one large pro­ducer (Gary Arnold). The ini­tial large pro­ducer rep­re­sen­ta­tive is from the Broiler Or­gan­i­sa­tion and at the next cy­cle of trustee­ship, the large pro­ducer rep­re­sen­ta­tive will be from the Egg Or­gan­i­sa­tion. We now await the nom­i­na­tion of trustees by DAFF and the NAMC to start the reg­is­tra­tion process.→

In the in­terim, we’ve writ­ten to the Au­di­tor-gen­eral to get au­tho­ri­sa­tion for the trans­fer of the monies once the tax ex­emp­tion has been granted. As this is a first for the Au­di­torGen­eral, they’re con­sid­er­ing what the re­quire­ments for the trans­fer of the monies should be. Al­though some read­ers might be frus­trated to hear this, it is likely to take a good few months for the process to be fi­nalised.

Par­lia­ment

The hear­ings in Par­lia­ment on the state of the broiler in­dus­try con­tinue. The pre­sen­ta­tions by AFMA and the EU are avail­able to those who wish to view them. In the most re­cent round of hear­ings, the EU had the temer­ity to bring up the hor­mone myth and try tar­nish not only us, but also to blame DAFF for our al­leged trans­gres­sions. They then used the word “myth” to de­scribe their pric­ing model be­ing a case of dump­ing. Nor­mal peo­ple know that when you pro­duce too much of a good, the eas­i­est way to get rid of the sur­plus is to drop the price. There are al­ways sales be­ing ad­ver­tised. In the EU, the price of bone-in por­tions is low and yet Euro­peans still don’t buy the prod­ucts in suf­fi­cient quan­ti­ties to get rid of the sur­plus. That means that what you can’t sell is waste. If the prod­ucts were pro­duced for a third coun­try, pack­aged and pre­pared for con­sumer use as the EU pro­duc­ers do for their prod­ucts in­tended for lo­cal con­sump­tion, you might want to think oth­er­wise. This, of course, they’re not do­ing be­cause pro­duc­ing a prod­uct for some­one means you need to know that the re­cip­i­ent is go­ing to buy that prod­uct.

Then of course one gets to Eco­nom­ics 101. The value of a good is not the same thing as its cost. When the value is less than the cost, your busi­ness would nor­mally fail. In the EU, the mar­gins on the breast meat are so high that they mask the true losses on the dark meat. None of this ex­plains the ob­vi­ous point that no one in the world has worked out how to grow chicken pieces on their own - you have to have a whole chicken that went cluck be­fore you can have pieces of a slaugh­tered chicken that peo­ple might want to eat. So will the EU ever face the truth and de­velop some moral in­tegrity? I don’t think so, for then they’d have to pub­licly ac­knowl­edge, mea culpa, “we have abused the poorer coun­tries of the world by us­ing them as waste dis­posal sites”. Sound like colo­nial ex­cess to me, the mis­judged writ­ings of a lo­cal politi­cian not forgotten.

Task team

The gov­ern­ment task team is con­tin­u­ing its work. As this is a team - in other words, the par­ties are meant to be work­ing to­gether to­wards a com­mon goal - we need to make com­mit­ments to gov­ern­ment as to what we’ll do to bring about an im­prove­ment to our in­dus­try and the coun­try as a whole. Now I re­alise that many will say “first do some­thing gov­ern­ment and we will then re­cip­ro­cate”, but that isn’t how a team works. Teams are formed, prac­tice to­gether and play to­gether. We will need to make com­mit­ments. We are work­ing hard at pro­vid­ing gov­ern­ment with the re­li­able data they need to jus­tify some of the pro­posed ac­tions. To those who have pro­vided data, we thank you. To those who’d like to as­sist, please let me know your in­ter­est.

One of our sug­ges­tions will deal with the re­stric­tions we face by pay­ing more for grains than some of our in­ter­na­tional com­peti­tors do. Min­is­ter Zok­wana has men­tioned in pub­lic that South Africa might con­sider a strate­gic grain re­serve. This doesn’t have to mean that we re­vert to the days of con­trolled mar­ket­ing as some com­men­ta­tors have rushed to say. If done well, what it means is that the Porsche bri­gade will have to find other ways of mak­ing money with­out work­ing, for that is what spec­u­lat­ing us­ing your per­ceived greater knowl­edge than oth­ers to make a mar­gin which ben­e­fits no farmer and adds a few bil­lion Rand to the cost of the to­tal maize crop, is all about. Of course, no mat­ter how such a re­serve might be formed, it will in­volve some costs. It’s our view that these costs will be much less than the spec­u­la­tive mar­gins made by the traders. DAFF, dur­ing their pre­sen­ta­tion to Par­lia­ment,

seemed not well in­clined to deal with the soya bean and soya oil­cake tar­iffs. This needs us to try harder to get their sup­port, as re­mov­ing these tar­iffs has a ben­e­fit far greater than the tar­iff in­come it­self, since all soy beans or oil­cake (mostly oil­cake) sold, in­clud­ing lo­cal pro­duc­tion, have their prices up­wardly ad­justed to ac­com­mo­date the tar­iff ef­fect.

Trade

The AGOA quota for the year 1 April 2017 to 31 March 2018 won’t in­crease from the cur­rent 65 000 tonnes ac­cord­ing to our cal­cu­la­tion, and we await con­fir­ma­tion of this from DAFF, who have the re­spon­si­bil­ity for quota set­ting and ad­min­is­tra­tion. A clause in­serted by the dti in the quota al­lo­ca­tion process gazetted in De­cem­ber 2015 has come back to hurt us, as March 2017 pro­vided a ver­i­ta­ble flood of US waste even though the an­nual im­ports were slightly less than the 65 000 tonnes we had agreed to. We’d been es­pe­cially cau­tious to man­age both vol­ume and volatil­ity and then the dti amended the agreed sys­tem. Well, that’s what we now live with and the on­go­ing AI out­breaks in the EU have al­ready led to im­port de­flec­tion to other sources. Clearly these are next in line to be re­solved in the proper way. We are hard at work here. The ini­tial com­ments on the sun­set re­view have been re­quests for ex­ten­sions to sub­mit data, all of which have so far been de­nied.

We con­tinue to work on the Sal­mo­nella court case where we are con­test­ing the decision by gov­ern­ment to lower the im­port stan­dards to suit the needs of the USA. I think there a num­ber of more it­er­a­tions be­tween the par­ties be­fore this mat­ter has any chance of get­ting to Court.

I at­tended the In­ter­na­tional Poul­try Coun­cil meet­ing in Colom­bia this past month. While there, I had a num­ber of meet­ings with our EU coun­ter­parts to dis­cuss pos­si­ble so­lu­tions to their prob­lem which will hope­fully come to pass when a safe­guard of suf­fi­cient ex­tent is gazetted, mak­ing it un­af­ford­able for them to treat us as waste dis­posal site num­ber one. Can ex­ports of breast meat traded in the nor­mal course of trade i.e. fairly, ever be a quid pro quo for them to dump their waste here? They think this is a ter­rific idea; we re­main un­con­vinced. If we keep talk­ing, a so­lu­tion may be found, but we aren’t there yet. All in­di­ca­tions are that by the time you read this, ITAC will have fin­ished their de­lib­er­a­tions on our sub­mis­sions for the EU safe­guard and would’ve made a rec­om­men­da­tion to Min­is­ter Davies. I’m hope­ful we’ll have some­thing to cheer while we’re at Avi Africa when his an­nounce­ment is made, al­though it may well be that we only hear his decision at the end of June.

None of us know what the ef­fect of Brexit will be on our trad­ing re­la­tion­ship with our former colo­nial mas­ters. Quite clearly the UK will want to try get a bet­ter deal than they cur­rently have, and I hope our ne­go­tia­tors are think­ing the same way. The Brexit dilemma for the UK has an in­ter­est­ing les­son for us. Since the UK has been a mem­ber of the EU for so long, they no longer have trade ne­go­ti­at­ing skills - the EU did this for them. Now in a short pe­riod of time, the UK has to sud­denly be­come ex­pert with­out many res­i­dent ex­perts. We’re rather in the same boat as, even though we’re a de­vel­op­ing coun­try, we need highly skilled civil ser­vants in the Chi­nese mould if we’re to com­pete against the big and nas­ties. Do we have enough of such peo­ple in our gov­ern­ment’s ser­vice? Cer­tainly when it comes to the ve­teri­nary ser­vices of DAFF we have good peo­ple but surely not enough of them; imagine if we had more highly skilled vet­eri­nar­i­ans in ser­vice how much fur­ther we’d be with many of the out­stand­ing mat­ters that hold back our ex­port pro­gramme?

The most re­cent set of com­pet­i­tive­ness data has been sup­plied by the LEI in­sti­tute in col­lab­o­ra­tion with BFAP. Even though 2015, the next bench­mark year, was a ter­ri­ble drought year for us with higher feed costs, we’re still cheaper pro­duc­ers than all the EU coun­tries they sur­vey. Al­though AMIE (and oth­ers) tried to make out that the drought was our main prob­lem, this in­de­pen­dent study proves this to an­other false state­ment by these var­i­ous com­men­ta­tors. Clearly the drought has been ter­ri­ble, and it has af­fected us, but our prob­lems with the EU come from their dump­ing of waste bone-in por­tions.

As­signees

This past month has seen a num­ber of meet­ings with the as­signee ap­pointed by DAFF to

im­ple­ment the poul­try meat and egg reg­u­la­tions un­der the APS Act. Now if we for­get for a mo­ment that this as­signee­ship was foisted on us with­out any con­sul­ta­tion on the pur­pose, the need and the im­pact of the as­sign­ment, we’re left with some se­ri­ous prob­lems. Firstly, what level of in­spec­tion is needed to en­sure an ad­e­quate level of mon­i­tor­ing of the im­ple­men­ta­tion of the reg­u­la­tions? Then se­condly what is a fair fee for the work in­volved in the mon­i­tor­ing? Fur­ther, we have ques­tions as to in­ter­pre­ta­tion of the term “owner” of these prod­ucts as the Act de­ter­mines the seller in a par­tic­u­lar way and this con­fers obli­ga­tions on the seller rather than the buyer. I hope that be­fore you have read this, we’ll have been able to meet with the re­spec­tive par­ties in a more open way to see if a prac­ti­cal so­lu­tion can be found. It’d be best to not have to go the le­gal route again when com­pro­mise is surely pos­si­ble. In the con­strained cir­cum­stances that the egg and broiler in­dus­tries find them­selves, all ex­tra costs are an un­af­ford­able bur­den.

SAPA

Prepa­ra­tions for Avi Africa con­tinue apace with reg­is­tra­tions to date a cou­ple of hun­dred del­e­gates ahead com­pared to the same time last year. I hope this trend con­tin­ues and that we have a bumper set of del­e­gates at­tend­ing. With the ad­di­tion of an evening ses­sion for smaller pro­duc­ers, we’re hope­ful day two will have lots to of­fer to all pro­duc­ers, in­clud­ing the smaller ones. The planned part­ner­ship with the FAO for next year will bring a whole range of new del­e­gates from many other African coun­tries.

The Me­dia Re­la­tions Com­mit­tee (MRC) met be­fore the Board meet­ing to dis­cuss our own PR drive. While the Fair Play move­ment has been giv­ing us a lot of me­dia air­time it isn’t a SAPA idea or project; it was started by in­vestors in the poul­try in­dus­try and is now sup­ported by some lo­cal poul­try pro­duc­ers. It is now also sup­ported by SAPA even though we weren’t party to its for­ma­tion. Dump­ing is not a one prod­uct is­sue - think of cot­ton, potato prod­ucts, sugar and a num­ber of other com­modi­ties in agri­cul­ture as well as steel and cloth­ing, to name but two othes. We hope the Fair Play move­ment de­vel­ops mo­men­tum and deals with the bad treat­ment of the de­vel­op­ing world by mostly de­vel­oped world coun­tries. It is the view of the MRC and the SAPA Board that we should de­velop our own PR strat­egy and ser­vice providers will be asked to present pro­pos­als af­ter Avi Africa for con­sid­er­a­tion by the Board. The MRC agreed to hold over re­con­sid­er­ing the ed­i­to­rial brief un­til a new SAPA com­mu­ni­ca­tions strat­egy is ap­proved.

At the Board meet­ing, new awards cri­te­ria in­clud­ing for trans­for­ma­tion were dis­cussed and drafts have been cir­cu­lated for dis­cus­sion and ap­proval af­ter Congress and the es­tab­lish­ment of a new Board. Jake Mok­wene was con­firmed as a Board mem­ber in place of Jus­tice Zotwa. The 2016 fi­nan­cials were signed dur­ing the Board meet­ing, al­low­ing them to be taken to Congress and the AGMS for mem­ber ap­proval.

Gen­eral

At the IPC meet­ing held last month, the IPC got close to fi­nal­is­ing a global broiler in­dus­try pro­to­col on AMR. I will cir­cu­late the fi­nal ver­sion when the last com­ments have been in­cluded. One of my roles at the IPC is to chair the An­i­mal Health and wel­fare work­ing group of the IPC, which work­ing group is charged with draw­ing up the global pro­to­col. All IPC pre­sen­ta­tions are avail­able to mem­bers if they so de­sire.

Last month was also the time of the first IEC meet­ing, and all those pre­sen­ta­tions are also avail­able to mem­bers. The global ex­pert panel on AI, on which I sit, met on the side­lines of the IEC meet­ing. This panel and its work have met with ap­proval from the DG of the OIE, the OIE be­ing rep­re­sented on the panel through Dr Alex Thier­mann.

Af­ter the IEC meet­ing I went to see the FAO on be­half of the IEC. Apart from mat­ters of di­rect rel­e­vance to the global egg in­dus­try, we had a chance to dis­cuss the po­si­tion of an­i­mal wel­fare and the coun­try spe­cific AMR strate­gies in the var­i­ous African coun­tries. The FAO have asked to be al­lowed to have a side event at Avi Africa next year, where they’ll bring a range of pro­ducer rep­re­sen­ta­tive and of­fi­cials from a num­ber of African coun­tries. This will be a huge boost to the broader rel­e­vance of Avi Africa.

Re­gards un­til next month, Kevin Lovell, CEO.¡

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.