Rainbow Chickens, the second biggest producer of poultry in the local big five, has entered the fray demanding that the Minister for Trade Industry and Competition (Dtic), Ebrahim Patel, immediately reverse the decision to delay higher tariffs on countries that dump poultry in South Africa.
RAINBOW Chickens, the second biggest producer of poultry in the local big five, has entered the fray demanding that Minister for Trade Industry and Competition (Dtic) Ebrahim Patel immediately reverse the decision to delay higher tariffs on countries that dump poultry in South Africa.
Rainbow, a division of RCL Foods, said the decision to delay for the implementation of anti-dumping duties against five countries – Brazil levied 265 percent, Ireland 158 percent, Denmark 67 percent, Poland 96 percent and Spain up to 85 percent – for 12 months would not help consumers, as Patel has contended.
They argue this has enabled a deluge of poultry imports, harming the local industry.
“Despite the minister’s decision, Rainbow will continue with its R220 million investment in returning a second shift to its Hammarsdale processing plant in KwaZulu-Natal; thereby adding 328 jobs and having 47 percent of the increased broiler demand grown by black farmers. We do, however, call on Minister Patel to reconsider his decision and stop unfair trade soonest to enable us and our industry to invest and grow with more confidence, so that we may deliver what our country needs,” Rainbow stated.
Describing as “spare parts” the bone-in-chicken portions such as leg quarters dumped in South Africa, Rainbow said the landed price of these portions bore no relation to the production cost of those chicken pieces.
Remgro, the majority shareholder in Rainbow’s parent company, RCL Foods, also said the minister should have consulted the poultry industry before deciding to suspend the implementation of the anti-dumping duties, a decision which would negatively affect poultry producers.
The 12-month suspension of anti-dumping duties would distort the SA poultry industry and impact other agricultural industries such as maize.
“As investors in the poultry industry, we remain supportive of the Poultry Master Plan which was co-created by the government and industry to harness and support the local industry’s potential. We therefore share the industry’s disappointment in the ministry’s lack of consultation prior to the latest determination,” Remgro said.
Independent agricultural economist Dr Kobus Laubscher said that it was extremely difficult for South African poultry farmers to make a profit because of high input costs.
He pointed out that poultry farmers in the five exporting countries to which the anti-dumping duties would have applied – Brazil, Denmark, Ireland, Poland and Spain – received considerable state support, while South African farmers did not.
As a result, these exporters could sell products at prices that were not market-related.
South African farmers were left to the mercy of free market principles and vastly increased input costs “without any support whatsoever”, he said.
Looking at the likely impact on the maize industry, he said a considerable proportion of the annual maize harvest was bought by poultry producers.
Poultry imports were “the importation of grain in the form of meat”, while South Africa needed to “export maize in the form of poultry”, Laubscher stated.
Remgro said: “We believe the goodwill created over the years of crafting the Master Plan would have led to finding the appropriate solutions to better alleviate the plight of the consumer without reversing the gains made by local industry to date, and in turn putting the industry’s prospects at risk.
“We believe the postponement of the implementation of the anti-dumping duties will negatively impact the local industry’s capacity to grow and continue to incrementally contribute positively to job creation and government’s localisation efforts.”
However, Donald MacKay, a director at XA Global Trade Advisors, argues that local poultry producers are basically crying wolf.
He said higher poultry tariffs appeared to be an easier trigger to pull for local producers and the International Trade Administration Commission over factors such as high electricity prices, labour costs and lack of service delivery – all of which affected local poultry producers.
He said the figures of intruding imports of chicken cuts were exaggerated by local poultry producers that not only were the thighs, wings and leg quarters produced insufficient to meet demand, but that mechanically deboned meats, which are a staple for polony and sausage producers, were not available at all locally.
“Why should we levy on products that we are not able to supply adequately locally? It is also a misconception that these cuts are not wanted at the point of origin, South Africa is willing to pay a premium to import these cuts because they have higher demand here,” he said.
– BUSINESS REPORT
