Johannesburg - No chicken at Christmas lunch? The scenario seems apocalyptic but South Africans are facing the very real possibility of a chicken-less festive season this year due to a perfect storm of supply shortages and rapid price hikes.
This is the warning from meat retailer, Hume International, which deals with various national and international retailers as well as independent retail chain stores, manufacturers, wholesalers and traders.
The latest data from the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) revealed alarming statistics, with the price of a 10kg bag of frozen chicken rising by nearly 3% in just 30 days. This price surge can be attributed to several factors, including non-tariff trade barriers, anti-competitive anti-dumping duties, and local supply challenges exacerbated by a bird flu epidemic.
More bad news is that the poultry industry faces job losses because of the worsening electricity crisis with producers struggling to cope with generator costs which can be anything between R20 000 and R30 000 per day, depending on the size of the farm.
Managing Director of Hume International, Fred Hume, said multiple industry issues have now come to a head as local market pressures hit supply chains. He warned that South Africans should expect this trend to only increase in ferocity.
“These runaway prices have three potential causes: non-tariff trade barriers that blocked imports from major international suppliers; the anti-competitive anti-dumping duties levied against South Africa’s most important poultry trading partners; and underwhelming local supply, exacerbated by an ongoing bird flu epidemic and other pressures,” Hume said.
He added that unlike our neighbours in Namibia, South Africa has been dragging its feet in reopening poultry trade with certain countries like Poland, Belgium, and Argentina, even though they have been declared bird flu-free. While Ireland has the green light, it’s a far smaller producer than Poland, Belgium, or Argentina, raising the concern that trade permissions may currently be guided by political rather than health motivations.
“The failure to reopen trade with these countries, even after they have been declared free of bird flu, serves as a significant non-tariff barrier to trade, further protecting local producers to the detriment of consumers, importers, and local resellers,” he said.
South Africa has implemented anti-dumping duties of a maximum of 265% for bone-in chicken imported from Brazil, the country’s largest source of imported chicken, in addition to the existing 62% import tariff. South Africa has further raised significant anti-dumping duties on chicken against Ireland, Poland, Spain, and Denmark.
Prior to the introduction of these duties, bone-in chicken from Poland, Spain, and Denmark were duty-free. These punitive tariffs have already disincentivised imports, which have historically served to enhance competition and keep prices low for consumers, while augmenting local supply in times of shortage.
Originally intended to protect local producers and encourage job creation, these anti-dumping duties and other anti-competitive regulations have alienated our most important trading partners and have led to zero job creation. Hume warned that South Africa may in fact see scores of workers being furloughed or retrenched or, in the best-case scenario, working fewer hours and receiving lower incomes.
He added that fewer international poultry producers now want to trade with South Africa while other markets offer them better prices and more beneficial trade terms.
“This means that we effectively have no Plan B in the event of, for example, a widespread bird flu epidemic decimating local supply. But topping off the powder keg, a new strain of bird flu called H7N6 has spread through Mpumalanga, Gauteng, and the Free State over the past couple of months. Alongside the more common H5N1 strain, this has led to the death of more than one million chickens this year by the most conservative estimations, resulting in billions in lost revenue.
“Coupled with unfavourable import tariffs, this will inevitably lead to meteoric price increases, lower supply availability, and an alarming drop in consumption of this protein which is so integral to the majority of South Africans. Worse still, the recent bird flu outbreak is hardly a black swan event. Bird flu is endemic in every poultry flock in the world, but under normal circumstances, imports would cushion the blow and keep prices in check. That is no longer the case,” he added.
Hume said the cost pressures of load shedding and the deteriorating water infrastructure are likely to be with us for some time to come. By forcing exclusive dependence on local producers, South Africa is inevitably passing these expenses onto already vulnerable consumers.
But Dr Abongile Balarane, General Manager at the South African Poultry Association (Sapa), said he doubts that there will be shortage of chicken come Christmas and said even egg supplies should be normal.
Sapa said SA has lost more than four million chickens because of the new H7 Avian Influenza strain, which accounts for between 15 and 17% of the country’s total chicken production.
“We are in the third cycle of the influenza outbreak but this will ease as we head into the summer months. We will begin a vaccination programme shortly and I want to assure consumers that for now, chicken and eggs are safe to eat. When a farm is affected, we immediately quarantine and things like eggs, chicken, manure and feed from that farm, are destroyed. There is also no proof that Avian Influenza can be passed from chickens to humans,” he said.
Baralane said the poultry industry is struggling to maintain the labour force but adds that talks with the government are showing positive signs.
“We have strong skills in the sector and will be able to restock but for now that part of the value chain is negatively affected,” Balarane concluded.