From the DESK
Egg matters, trade and the transformation imperative
Most of you will read this at Avi Africa. Welcome to all that are here. To those not at Avi Africa, we hope to see you next year. We’ve changed the programme a bit to try make the event more appealing for members. Please do give us your feedback.
At this year’s event we will be remembering a number of industry stalwarts who have left us in the last year. I hope you can all take a moment to remember those that you knew best.
At the time of writing this letter, we still had to hold the promised Code of Practice meetings with egg producers. Those of you at Avi Africa will know the outcome from the decisions made at Congress; for the rest of you we will report next month if the new Code of Practice, for both broiler and layer production, will be in force this year.
We will also be reporting on the resolution made by the Egg Organisation, and then by Congress, on the future of the Egg Organisation. It is perhaps worth explaining that subsidiaries cannot leave SAPA; members can leave. For as long as there are three or more members of one of the subsidiaries, they are valid organisations in terms of South African law. Whether it’s sensible to keep the organisations going is a matter for the respective organisation and for SAPA itself to decide. As it is only SAPA itself that has legal standing in terms of our law, it’s SAPA that suffers the effects of the current shortfall in membership fees to cover Egg Organisation activities. It is also worth noting that the legally assigned role of SAPA as a Breed Society would remain even if the Egg Organisation was dissolved.
The government-led task team met again in May and will meet in early June. The plans are starting to get to the more detailed stage. At both the DAFF and dti budget hearings in Parliament, there was no specific mention of direct budget support. Both departments do have
allocations for agro-processing and production support. We will need to unpick the details of these offers of support in the next month or so.
This has been a busy month with the IPC meeting in Colombia and trade visits to Iran and the UAE. In all three cases, trade issues were at the forefront of discussions. The EU does seem keen to accelerate access to their market if we do not close our market to them for their leg quarter waste. There are a couple of difficulties we have to overcome. The first is that it is hard for us to understand why fair trade exports by us should equate to waste disposal by them? I think we can find an answer that might work for both parties if we can have comfort that whatever volume of their waste is able to be tolerated by us can be limited in a guaranteed way. The safeguard will first have to come into effect before we can finalise EU access. This final safeguard is likely to be gazetted later than we expected, as it seems as if ITAC have had to do further data work which the EU and others have to be able to comment on before Minister Davies can act. Minister Davies was quite clear in Parliament that he accepts that the current 13,9% is not an adequate safeguard and that he awaits the advice of ITAC before he can consider increasing the current level to a more effective level.
When it comes to the Middle Eastern countries we are working on unblocking some of the SPS type issues and I am positive that our access will improve over the next year or so.
SARS published their intention to add a new sub tariff line for imports – a mixed portion line - which we do not think will be of assistance to SARS for its purposes. We have made submissions to SARS in this regard and will keep you posted.
We have also responded to some of the comments by interested parties on the USA anti-dumping sunset review. It seems we will only be responding to comments from importers as no US submissions were on the public file as at the date of writing this letter.
While attending both the dti and DAFF budget votes in Parliament it was interesting to note the way the various parties understand transformation. Now, being a bit of a stickler for the proper use of language, it should be clear to all that the word transformation means a fundamental type of change. There is no need to use the term ‘radical’ as radical change usually means destruction and our constitutional imperative is for real change that does not destroy but rather creates. Disruption without destruction should be our hashtag. Whosoever runs our country, they will all be obliged to transform the country. Which brings me to my next beef - the word economic in the slogan ‘radical economic transformation’ is inappropriate. Our constitution requires us to change the nature of society. It does not help to simply redistribute an existing system – we are obliged to create a more inclusive system for South Africa that is both more inclusive and which leads to economic growth. What are your plans in this regard?
Listening to the sometimes heated debates, one realised that we lack leadership. As a developing country, we need leaders who will take us by the hand and give us reason to believe in hope. Then we need a government that opens the doors of hope so that businesses who own the levers of hope will want to use those levers for their own gain and for the benefit of the broader society. All three parties need to work together for change. Else we are talking about nothing more than rent seeking.
A number of the opposition parties made mention of our industry in the two debates and Minister Davies was clear in his response to the comments from the other parties that government will do all it can to ensure that we do not collapse completely. We thank him for his commitment to us. It was also clear to me that at least some of the opposition parties understand the wonderful transformation opportunity that exists if we can stop chicken dumping and get eggs on school feeding scheme menus.
If it wasn’t clear to readers before, the key impact of dumping is that the EU is oppressing our people and holding back the development of our country so that they can continue to benefit from→
their colonial-era business practices. We are their market and they see this as a right. Abuse by a new name.
We have continued with our work to find a solution to the assignee cost problems. The scheme is meant to come into effect on 1 June and in its current form it is likely to lead to legal action. I hope that we can obviate such a course of action although whatever I write now will be overtaken by events that you will all know about long before you read this. The principle of paying fairly for a real and needed service is not the problem; it is the invoicing mode and the extent of the monitoring that are problematic.
Avian influenza was an important issue discussed at the recent OIE General Session. With well over 1 000 outbreaks in poultry in Europe this last season (Europe in the broader sense, not only the EU) and well over 1 600 outbreaks in wild birds within Europe over the same period, it is clear that Europe is under sustained attack from this disease. This will lead to long term insecurity in the supply of breeding stock if we don’t get more breeders to form compartment systems that veterinary authorities in destination countries can accept. It also means that the likelihood of Europe having a resident population of AI throughout the year is heightened i.e. this disease might well no longer be seasonal, originating in Asia with migrating wild birds, and rather be continually circulating within Europe. Even if this does come to pass, the risk of transmission will still have seasonal peaks with the trigger for an outbreak now easier to release.
So what does this mean to us? Well the most important consideration is that strong calls for a weakening of standards to facilitate trade might be forced on us. There are calls to no longer report LPAI as some countries use the presence of LPAI to impose trade restrictions. Now the OIE standards can be interpreted to allow for LPAI based trade bans, and from a scientific perspective, the transmission of LPAI from birds to ferrets (the standard test animal for the disease) does take place in a laboratory environment.
So there is some risk, although it is much reduced, as the key distinction between LPAI and HPAI within poultry is that HPAI is replicating within the organs of the bird whereas LPAI is merely circulating and, to a lesser extent, replicating in the tissue fluids of the bird. Since most outbreaks come from LPAI which transition to HPAI, we should not underestimate the risk, and non-reporting of LPAI is very unwise. We’ll be acting in your best interests in this regard as the political pressure on the OIE is ramped up.
The poultry density in Europe and some parts of the USA will make for higher risk status to be almost permanent. The prevalence of free range and organic flocks in some European countries will also add to the risk profile. I am sure that many of you know that free range flocks in the Netherlands have been shown to have a 13 to 15 times higher likelihood of disease transmission than conventionally farmed birds. Now the Netherlands is an outlier when it comes to poultry density so please do not take this to mean that the same risk profile applies to South Africa, although the risk will also be higher than for conventionally farmed birds
Last month we bid farewell to Ronald Ramabulana who has left the service of the NAMC. Under his leadership, the NAMC has provided an independent view of many of the issues facing agriculture. I do hope that his successor carries this good work forward.
At NAMPO last month, the Fair Play movement had a public session which seemed to have gone down well with the audience. It is going to be so hard to put enough pressure on the developed world that they consider it necessary to behave properly in their dealings with the developing world.
We have been requested to attend the DAFF quarterly review session at the end of May and the beginning of June. While it is to be supported that we are part of such reviews it is not going to be worth much if we cannot have our views included in future plans.
Regards until next month, Kevin Lovell, CEO.¡