The Competition Commission plans to do a market inquiry into the poultry industry value chain, saying it has reason to believe there are features in the poultry market that may impede, distort or restrict competition.
This will come as another blow to poultry companies, which only two weeks ago heard they would face stiffer competition from frozen imports, after the government provided temporary import rebates on frozen poultry.
The rebates were granted ostensibly due to a shortage of birds locally, following the culling of 8.5 million chickens last year due to avian flu, and notwithstanding that the industry has disputed there was a shortage that necessitated the import rebates. However, some poultry product prices in some regions, notably for eggs, have increased sharply in the past year due to avian flu.
Also, last year, on top of the avian flu outbreak, poultry producers faced massive losses due to high feed input costs, high inflationary costs, municipal service delivery problems and load shedding.
Trade, Industry and Competition Minister Ebrahim Patel had hinted, at the granting of the rebates this month, that further action may be taken to address poultry pricing.
The Competition Commission said on Friday that the draft terms of reference for the Poultry Market Inquiry (PMI) had been gazetted on February 6. Interested parties were asked to make written submissions by no later than March 8.
The PMI would also examine the participation of small and medium enterprises (SMEs) and historically-disadvantaged persons (HDPs) in the poultry industry value chain.
“Market outcomes in the poultry industry matter, as chicken meat and eggs are a key source of protein for the majority of South Africans, and particularly low-income households,” said the commission’s chief economist, James Hodge.
“A poultry market inquiry into the concentrated and integrated structure of the industry can complement other initiatives to improve the competitiveness of the industry to the benefit of consumers and smaller participants,” he said.
The South African Poultry industry is a R60 billion national asset and the second-largest agricultural sector in the country, as well as the largest employer in agriculture. The SA Poultry Association had not replied to emailed questions at the time of going to press.