POULTRY prices are in the crosshairs of the Russian-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.
Pietermaritzburg Economic Justice and Dignity Group programme co-ordinator Mervyn Abrahams said this week that the price of frozen chicken portions has increased 17 percent in a year.
Labour unions and debt firms this week warned South African consumers to be very frugal with their spending as they face a “double whammy” of a massive fuel hike increase, which will result in higher food prices, and as the fallout of Russia’s invasion of Ukraine increases both costs.
The Department of Mineral Resources and Energy this week announced 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 also 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 grow jobs.
According to SA Poultry Association (Sapa) chairman 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 2022.
The top five local producers making up between 67 – 70 percent of weekly production comprise: 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 that 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 between 1 million and 2 million birds per week.
However, he said the latest anti-dumping duties on bone-in imports from Brazil and four EU countries could put short-term pressure on local producers to meet demand. 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 effects the consumer, but as the sector levels up, the prices should level out.
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 yet meet local demand without imports.
Paul Matthew, the chief executive of the Association of Meat Importers and Exporters, 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 red-tape bureaucracy, and cost-inducing delays driven by the local poultry sector because of the inefficiency of our import and export systems," he said.
Matthew said the tariff debate is a side-show 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 will increase the hardships of stressed South Africa consumers.
ChickenFacts, a research based 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, holding it that most other countries around the world “balance the carcass”, this means that 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 measures.
“South Africa has to find a market for their breast meat and if they could meet other country 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 already 62 percent import duty,” ChickenFacts said, pointing out to a potential shortage of wings and dark meat and an oversupply of white meat in South Africa.
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