End of the Rainbow?
Poultry giant selling off farms in KZN
THIRTEEN of Rainbow Chicken’s 22 farms on the Durban-to-Pietermaritzburg N3 route are up for sale and the price tags range from R9 million to R60 million.
The farms have already been taken out of production, costing 1 350 people their jobs.
The poultry farming giant told the Daily News that because of the increased volumes of dumped chicken flooding the market, primarily from the EU, it had been forced to scale down its operations in Hammarsdale.
Renamed RCL Foods, Scott Pitman, RCL spokesperson confirmed the sales, saying the company also closed down one of two shifts in its Hammarsdale plant. He said the retrenchments took effect at the end of January.
Despite Deputy President Cyril Ramaphosa recently declaring to Parliament that the government would try to save the beleaguered poultry farms, RCL said they would not renege on their decision to put the 13 farms up for sale and would not await the government’s intervention.
“The farms have already been taken out of production and the staff reductions took effect by the end of January, so there is no staff left on the farms,” Pitman said.
According to Pitman, RCL Foods’ remaining nine farms were still in operation.
He said there had been a great deal of interest shown in the sales and added that buyers had until the end of next month to submit their expressions of interest.
Pitman said it was “highly unlikely” that the potential new owners of the 13 farms would be ordered to run them as poultry operations, because dumping had plunged the industry into such a dire situation.
“They are more likely to rezone and develop the majority of the farms for other uses,” he said.
“The situation is a real tragedy, because should the dumping of cheap chicken be stopped, it would mean rebuilding the industry, which would be difficult and extremely expensive.”
Pitman said they had managed to place 300 workers from Hammarsdale at their other farms in different parts of the country, meaning 1 050 people had lost their jobs.
More than 400 workers took voluntary retrenchment pack- ages, said Pitman, and more than 500 casual workers, many of whom had worked at Hammarsdale for lengthy periods, had been made redundant.
“RCL Foods committed R1m to an extensive social support plan, which is being developed in consultation, for the retrenched workers.”
He said the impact on the region had been significant, because the chicken industry had been the biggest employer for decades, with other job opportunities being scarce.
Protect
“It is imperative that dumping be stopped to protect further job losses,” he said.
However, David Wolpert, chief executive officer of the Association of Meat Importers and Exporters of South Africa (Amiesa), had a different theory on why the local poultry industry was on a steady decline.
“I don’t believe the problems relating to the local poultry industry are driven by imports but by the drought, which has led to food for chickens becoming very expensive, and the fact that the local poultry industry doesn’t have an export strategy,” he said.
He said imported chicken made up about 14% of South Africa’s total poultry consumption and was too small a number to have such a devastating effect on the industry.
“The local poultry industry has to work hand in hand with the government to open export markets and local industry should then work to exploit opportunities in those export markets,” Wolpert said.
He said that with the drought over, maize prices would be driven down and that would in turn see an upturn in local profitability.
Wolpert’s assertions were, however, disputed by Kevin Lovell, chief executive of the South African Poultry Association, who said the 14% import figure was incorrect.
“If you compare local bone-in portion production with imports of bone-in portions, the imports make up almost 25% of local consumption.
“The real answer is that it’s not the number that is important, but its effect.
“The EU producers complain bitterly about the impact of imports on their market and they import a mere 7% of the consumption, unlike our 25% of bone-in portions and 26% if you count all products,” Lovell said.
He said the drought argument was also incorrect because agriculture was used to “calamity”, whether it was drought, floods or pestilence, and agriculture compensated for this by increasing its prices.
“Rainbow, in common with other chicken producers, was unable to increase the prices of its chicken products because of the price-suppressing effect of the dumped imports.
“So it is not the drought that has affected us but imports, or else the normal agricultural price- setting mechanisms would have come into play,” said Lovell.
He believed importers should reconsider their position as job stealers and think more broadly about the needs of South Africa.