Poultry price a rip-off

DEAR SIR — I refer to your report (Poulterers fear influx of chicken from EU, April 3), regarding the South African Poultry Association’s application for a general increase in duty of imported chicken.

The local poultry industry has been lulled into complacency because they have been making false profits for the past seven to eight years by selling excessively brined chicken, in most cases, 40%-plus brine, of which 98% is plain municipal water and the balance is salt and moisture retention agents. Furthermore, government protection in the form of an already punitive import duty has been their saving grace.

One does not want to sound like a stuck record, but let me again state that product is imported from a wide range of countries. Therefore no single country can be accused of dumping chicken in SA.

This raises the questions, why is domestic chicken so expensive and why can domestic producers not export their product competitively?

The poultry industry internationally is going through a torrid time. The one big difference between other countries and SA has been the fact that generally the international industry has been losing money, whereas South African producers have just been making less profit.

In recent trading statements some local producers have been mentioning that losses increased due to hedging contracts. I would bet this is the case with other producers as well, who have diplomatically elected to not share this fact with their shareholders, especially about grain which constitutes 55% of input costs (this figure conveniently climbs to 70% when it suits the poultry association). Why should we as consumers have to pay for management incompetence?

We have been ripped off with unacceptably high brining of chicken over the past several years, and there is now a strong possibility that those who are taking advantage of others, especially the poor, will be propped up by increasing import duty.

The absolute gall to apply for an increase in duty is an incomprehensible act of pure greed on the part of the association. The sad fact is that it will not have an effect on the volume of imported chicken.

It will, once again, increase the profits of the long-time inefficient domestic poultry producers, greatly disadvantage the poor, fuel food inflation and cushion the fiscus because of the higher import duty.

With the maize price starting to fall and the prospect of higher duties, poultry producers can look forward to a “double whammy”.

I suggest we all invest in listed poultry companies.