Sunday Tribune

Chicken prices in cross hairs of global economy conflict

- POULTRY BANELE GININDZA banele.ginindza@inl.co.za

POULTRY prices are in the cross hairs of the Russia-ukraine conflict with escalating food price inflation and chicken anti-dumping tariffs said to be pushing up the price consumers pay at the till.

This while local poultry players try to build the sector to meet local demand and boost jobs so that South Africa is not reliant on overseas chicken.

According to the Pietermari­tzburg Economic Justice and Dignity Group programme co-ordinator, Mervyn Abrahams, the price of frozen chicken portions has increased by 17 percent in a year.

Labour unions and debt firms warned this week that South African consumers would have to be very frugal as they faced the “double whammy” of a massive fuel price hike, which would result in higher food prices, and the fallout of Russia’s invasion of Ukraine, which would increase both costs.

The Department of Mineral Resources and Energy announced this week that the price of 95 octane petrol would rise to R21.60 per litre, and 93 octane petrol to R21.35. An increase of R1.46 per litre, it is much higher than predicted and pushes the price to a record high.

The Agricultur­al Business Chamber said agricultur­al markets would be affected by the disruption caused after Russia invaded Ukraine, and South Africa’s agribusine­sses and farmers would not be insulated, primarily through the price transmissi­on of a range of commoditie­s and inputs.

The supply of poultry, however, is not a problem, with the local industry ramping up its production to meet local demand and create jobs.

According to SA Poultry Associatio­n (Sapa) chairperso­n Aziz Sulliman, the industry has so far spent R1.14 billion to increase slaughter capacity to 22.5 million birds per week from 19 million birds per week in 2019.

Sulliman said the industry expected to have created 1 365 additional jobs by the end of the year.

The top five local producers making up 67–70 percent of weekly production are: Astral, Rainbow/rcl, Country Bird Sovereign/rocklands and Daybreak, according to Sapa.

About 670 black emerging enterprise­s account for 25 percent of the output.

The head of Sapa’s broiler organisati­on, Izaak Breitenbac­h, said current production was 20.5 million birds per week, about a million below the total the industry would like.

Breitenbac­h said even though demand was rising as markets normalise, it still left unused capacity of 1 million to 2 million birds per week.

He said the latest anti-dumping duties on bone-in imports from Brazil and four EU countries could put shortterm pressure on local producers to meet demand, but over the longer

term local farmers would be able to supply sufficient chicken for the South African market.

The price of growing South Africa’s local poultry sector and protecting jobs does come at a cost, which affects the consumer, but as the sector levels out, the prices should follow suit.

In December South Africa imposed provisiona­l anti-dumping duties on chicken imports from Brazil (265.4 percent) and four EU countries — Denmark (67.4 percent), Ireland

(158.42 percent), Poland (96.9 percent), and Spain (85.8 percent).

The duties applied particular­ly to the bone-in imports – mainly leg quarters, but also other portions such as drumsticks, thighs and wings.

These duties will remain in effect until June 14 for the Internatio­nal Trade Administra­tion Commission to have completed its investigat­ion into the anti-dumping applicatio­n by the local poultry industry.

But other industry participan­ts are doubtful local producers can meet local demand without imports.

Paul Matthew, the chief executive of the Associatio­n of Meat Importers &

Exporters (AMIE), said, “One needs to ask what has happened to the Poultry Master Plan?

The core underpinni­ng object of the plan was for local producers to export the ‘white’ meat to trade partners overseas.

“Three years since signing the plan nothing has happened. Instead, there have been mountains of redtape bureaucrac­y, and cost-inducing delays driven by the local poultry sector because of the inefficien­cy of our import and export systems,”

Matthew said the tariff debate was a sideshow to cover up inefficien­cies in the local industry, which was harming trade relations and pushing up prices.

He said a punitive trade policy footing would not solve the barriers and inhibitors on local growth and would increase the hardships of South Africa consumers.

Chickenfac­ts, a poultry activist group, said the local industry could not meet the demand. It said should imports be stopped completely, South Africa could be faced with poultry shortages, higher prices and food security issues. It said most other countries around the world “balance the carcass”– they create a demand for the entire chicken, not only a portion.

“South African poultry producers do not balance the carcass as they are unable to export products around the world.

Why? Because South Africa is one of the few countries in the world that brine their birds and this practice is unacceptab­le in most other markets worldwide, amongst other SPS (sanitary and phytosanit­ary) measures.

“South Africa have to find a market for their breast meat and if they could meet other countries’ requiremen­ts could export this at a premium and import the bone-in cuts that most South African consumers prefer,” Chickenfac­ts said.

“South Africa’s poultry industry has a unique structure as it is the only country in the world where the industry is dominated by five large producers.

“They are applying to implement anti-dumping duties for additional protection over and above the 62 percent import duty,” it said, pointing to a potential shortage of wings and dark meat and an oversupply of white meat in South Africa.

 ?? ?? LOCAL poultry producers are steadily ramping up production to meet local demand and create jobs.
LOCAL poultry producers are steadily ramping up production to meet local demand and create jobs.

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