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Export plan could help poultry firms

Opinion
The South African poultry industry has faced a plethora of challenges in the past 18 months. These challenges have been exacerbated by severe drought and culminated in a series of lay-offs earlier this year, which meant several thousand South African workers have lost their jobs.

However, with the drought over and chicken feed prices dropping again, I believe the local industry has an opportunity to grow and even expand. This expansion rests on their ability to develop a serious export programme. And the Association of Meat Importers and Exporters of SA (AMIE) would be the first to offer its assistance.

For some time now the South African Poultry Association (Sapa) has been boasting that it is the world’s fifth most competitive producer.

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Local poultry producers could benefit from an export programme. Photo: Simphiwe Mbokazi

This is impressive. Yet the South African poultry industry exports close to nothing. There are two possibilities here: either the assessment is incorrect, which is unlikely, or we are sleeping while the roosters are crowing. The need for a credible export programme is indeed a great and urgent one.

Sapa has continuously claimed that South African-produced chicken are blocked from important markets such as the EU, only to find out, as we did recently, that the industry has never made an application for access to the EU, a market with very large potential. This process of hiding important information while trying to arrive at a proper solution that benefits more than a few shareholders will not yield a workable outcome.

The same problem revealed itself when the court case on brining took place. Sapa repeatedly claimed that brining was introduced to improve the juiciness and taste of the product. But we now know, absolutely, that there was a very large economic incentive for this behaviour. Their investment in brining equipment and the relatively new regulations that curb this practice are no doubt also major contributors to the local industry's woes.

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The change in the brining legislation forces the industry to confront the reality that the business model of selling most of the chicken as a whole bird, simply cut into pieces, will not work. The moment the brining-driven model changes, exports become crucial, because optimising the return for each cut would appear to be the only way to compensate for the inability to sell water at the industrial scale it was being sold by the chicken industry.

AMIE has the international network and is well placed to move South African chicken into new markets. The question is whether Sapa’s membership is keen to take us up on our offer to assist and to pursue this route.

Our calculation values the negative impact of the changed brining legislation at around R7billion a year. That amount could easily be recouped via a meaningful export programme, yet there inexplicably seems to be no appetite for this by the local poultry industry. Instead they continue to cite dumping as the real reason for their woes.

However, as we have said previously, anti-dumping duties have been applied to imported chicken. If Sapa is serious about dumping, it should bring an application to the International Trade Administration Commission for further duties. Perhaps the formation of the “lobby group” FairPlay is just a means to distract the public from the local industry’s real woes in order to generate negative press about imported poultry.

The potential is there for a serious export industry from South Africa. Local poultry now has an opportunity not only to grow the sector to its previous state, but also to create thousands of new jobs and take the industry to new heights. A meaningful poultry export programme is not only essential, it is urgent.

David Wolpert is the chief executive of AMIE.

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