Johannesburg - Integrated poultry producer and animal feed supplier, Astral Foods, reported yesterday a 50 percent plunge in operating profit for the year to September with local poultry producers warning that imports would cause further damage if the local industry was not protected.
Astral Foods’ chief executive, Chris Schutte, said the company saw its operating profit for the year declining from R1.1 billion last year to R549 million at the end of September with the poultry division deteriorating 91.1 percent during the period.
“My biggest worry is the job losses to the local producers especially those ones in the rural areas where unemployment is rampant,” Schutte said.
Read also: Poultry imports destructive - Astral
Schutte’s concerns come in the wake of US chicken imports hitting South African supermarket shelves in March, for the first time in 15 years, ending a protracted trade dispute and ensuring that the country will continue to receive trade benefits under the African Growth and Opportunity Act (Agoa).
He said the country saw record levels of poultry imports during the year peaking at 57 700 tons in March.
“This was equivalent to approximately 10.3 million birds per week produced and represents approximately 55 percent of local production,” he added.
Astral’s poultry division reported a 4.5 percent increase in revenue from R8.7bn to R9.1bn, while the operating profits declined 91.1 percent to R59m, down from R661m reported a year before. The feed division was up 15.3 percent from R6.2bn to R7.2bn with operating profit climbing 14.7 percent to R485m from R423m.
Schutte said the government needed to revise the import legislation to save the industry. “The government must revise the legislations as the poultry industry is the biggest contributor to (gross domestic product) as far as agriculture is concerned.
“The rains we have seen are positive for the industry because if they keep on coming we could see a better maize production in May and with that the price of maize will start to come down, which will be good for the industry as this will lower the price of feeds,” he said.
Dominate
Schutte said allowing imports to dominate the local market spelt danger for the country’s future and job prospects. “A significant increase in bone-in portions originating from the EU has been reported. This has a direct impact on local job creation as imports benefit employment elsewhere around the globe,” he said.
Astral said the weakened state of consumer spending was unlikely to improve due to poor economic growth and higher unemployment, which will continue to constrain an increase in the country’s per capita consumption of poultry.
The SA Poultry Association said poultry was the most traded meat type in the world with total poultry trade in excess of $18bn (R259bn) a year.
The association’s chief executive, Kevin Lovell, said the local poultry industry was already feeling the impact of chicken exports.
He said the imports had already resulted in job losses in companies such as Rainbow Chicken.
“Yes, the imports have led to job losses and in this year alone Rainbow have announced that they are now reducing their workforce by 1 200 people having downscaled a bit earlier. Mike’s Chicken in Polokwane has closed down, others have reduced employment levels.
“In simple terms for every 10 000 tons of meat we import we lose more than 1 000 direct and indirect jobs,” Lovell said.
However, some experts have raised fears that the election of property billionaire Donald Trump could spell disaster for Agoa after the US president-elect voiced his unhappiness with both overseas aid and existing trade deals during his campaign.
But Agricultural Business Chamber (Agbiz) economist Wandile Sihlobo said the country had not imported a lot of poultry from the US as it was previously expected.
Sihlobo said between January and September, the country imported 230 643 tons of bone-in poultry portions, including wings, quarters, feet, drumsticks, among others.
He said only 8 percent or about 18 098 tons of the portions came from the US during the period.
“In that case we don’t believe that imports from the US are a reason for job losses in the country,” Sihlobo said, adding that the EU and Brazil had been more active in importing poultry.
“It appears the EU with 72 percent and Brazil 17 percent has steadfastly held on to their market share of South African bone-in poultry imports,” Sihlobo said.
Astral shares closed 0.16 percent higher at R121.50 on the JSE yesterday.
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