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High chicken prices impacts the poor the most

Picture: Pixabay

Picture: Pixabay

Published Jun 10, 2022


Durban: For many South Africans chicken is a preferred source of protein as it is more affordable than other meat, but hikes in farming costs, such as feed and fuel have resulted in price increases.

Hoping to relieve some pressure on the poultry sector, the South African Association of Meat Importers and Exporters (AMIE), recently held a briefing to explore how South Africa can develop a poultry export market as quickly as possible.

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Paul Matthew, the CEO of AMIE said poultry exports can be a game-changer for the country.

“Creating a robust, successful poultry export market for South African chicken would bring material value to the entire value chain, from local producers and their shareholders, to medium and small scale farmers, exporters, processors, and consumers.

“Unfortunately, the country is missing a massive opportunity because it does not meet the health and safety standards required by trade blocks such as the European Union,” he said.

Matthew said in 2019, all parties, including the local industry, importers and government, signed and agreed to a Poultry Master Plan.

He said one of the key requirements of the Plan was for the South African poultry industry to grow the export of local products.

“While there is enormous opportunity to do so, there is very little progress in this regard.”

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Matthew said in order for South Africa to export poultry to the global market, there was a checklist of items which the country and its poultry sector need to tackle urgently

This include gaining access to countries with whom South Africa has preferential trade agreements, meeting the international health and safety standards and requirements of countries to which South Africa will export, and for local producers to reorientate their operations to extract value from certain poultry cuts in markets that will pay a premium for them.

“AMIE intends establishing a dedicated export task group, which will, together with key stakeholders, facilitate access to export markets and provide processing capacity for cooked poultry products, which is especially desirable in the EU.

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“We are eager to work with our partners in government and with local producers to fast-track our country’s export potential. Government plays a critical role in securing the necessary trade conditions for export, and local producers will need to urgently resolve the health and safety challenges required to meet the standards of potential export markets,” he said.

Matthew also called for trade tariffs on all poultry products removed.

“We know that chicken is the primary, most affordable and therefore the most important source of protein for South African consumers. We also know we are facing a chicken price tsunami due to rampant inflation; global food and commodity shortages; and the state of the economy post Covid-19.

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“In addition, we are feeling the impact of the war in Ukraine on global food security; the escalation in fuel, transport and electricity costs; increasing trade tariffs; supply chain disruptions; and the fact that wages are decreasing and unemployment is increasing.

“South Africans are under extreme financial pressure. As a country, we have to do everything possible to stop the poultry price increases. The quickest and most effective way to do this is for the government to give the South African consumers relief by placing a three-year moratorium on imported poultry tariffs and removing VAT on poultry products,” he said.

Rosheda Muller, the president of the South African Informal Traders Alliance (SAITA), also called for the removal tariff taxes, and VAT on chicken products.

“By removing the taxes and VAT, it will provide informal traders and consumers from low income households with the appropriate relief as prices for this important food source continue to escalate.”

She said the hike in the price of chicken will hit the poor the most.

“When food prices increase to these levels, people go hungry and they don’t get the nutrient-rich foods that they need to stay healthy. If the government can help bring down the price of chicken taxes and levies, it will have a profound impact on people’s ability to afford this most important food category. That it will ensure communities, primarily those in low-income areas, are able to put a plate of nutritional food on the family table at night,” she said

Izaak Breitenbach, the general manager in the broiler division of the South African Poultry Association (SAPA), said close to 70% of the input cost in poultry production was feed that comprised maize and soya. Fuel costs were also a burden.

“We have seen a material increase in the price of the two commodities. This has put upward pressure on the price of chicken. Maize and soy prices on the global market are at an all-time high and South Africa pays global prices for its commodities on the Chicago Board of Trade.

“Furthermore, Ukraine is a net exporter of maize and soy and with the logistical supply chain being disruptive, it is also putting upward pressure on raw material prices. We are also concerned that Ukraine’s planting season is about to commence and that is also disrupted, which may put upward pressure on grain prices.”

Dane Tremearne, the owner of Greater Heights Farm in Camperdown, said the cost of poultry feed had risen. He supplies broilers – chickens that are bred and raised specifically for meat production.

“Due to the war between Russia and Ukraine and the drought in Brazil, the price of raw materials, such as imported maize and soya, have risen significantly. As a result, our suppliers are paying global prices.

“There has been an 8% or 9% hike on average in the price of feed, which is about a R400 increase per ton. So we now pay over R6 000 a ton. I buy 1 000 tons of feed a month, so the input costs are adding up. Thankfully, our customers understand the situation but I fear things could get worse in the coming months.”

Lee Pather, the owner of Leepath Poultry, a wholesale chicken supplier in Chatsworth, said: “We purchase chicken from the Western Cape, Port Elizabeth and Gauteng, among others. Two factors have affected us.

“Firstly, the fuel price increased and this drove up the transportation costs by more than 50% and we can expect to be paying way more with the new increases. Then, due to the hike in poultry feed, the price of chicken increased. But we don't have a choice.

“We supply chicken to lower-income areas around KwaZulu-Natal and the Eastern Cape. People depend on us for affordable chicken, so we have narrowed the profit margin. This is to ensure households can still afford to buy protein.”

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