As we launch into 2021 amid uncertainty over the Covid-19 pandemic, the SA poultry sector remains a strategic national industry. Chicken has long been the major source of protein for South Africans, cementing this industry’s role in assuring our country’s food security. A modern, efficient and internationally competitive industry, and the largest component of our agriculture sector, it plays a significant role in the economy, contributing to food security and employment. The poultry industry contributes about 18% of agricultural GDP and 39% of animal-product gross value (2016 figures). The “farm-gate” value of chicken meat and egg production was about R47bn in 2016, with the retail value representing a further R10bn-R15bn. This is an industry with earnings of more than R50bn and a major employer with about 110,000 direct and indirect workers. As a large consumer of maize and soya in feed supplies, it also supports a further 20,000 jobs in the grain industry.
Despite these economic inputs SA’s poultry producers receive no government subsidies, unlike their counterparts in other production areas, particularly the EU. Nonetheless, the industry is globally competitive, having outperformed the EU for the past 13 years on a cost per kilogram basis, and it needs no tariff protection when the playing field is level. The SA market is an attractive prospect for foreign trade partners, sometimes to the detriment of domestic producers. The chicken industry has been under assault from foreign producers, including the EU, for at least two decades, and it has been in crisis for nearly 10 years because of steadily rising imports. Unfair and predatory trade practices, including dumping, have stolen 30% of market share, bigger than that of the largest domestic producer. It has to be noted that, in contrast, the EU’s own import figures hover around 7%. Chicken imports reached a record high in 2018, when 566,000 tonnes were imported at a cost of R6.1bn. Imports in 2019 were 5.5% higher than the five-year average from 2013-2017. It was only in 2020 that import volumes decreased, due to a combination of global reductions in demand because of Covid-19, the implementation of new tariffs against Brazil and the US, and rand-dollar exchange-rate fluctuations. Tariffs have been only partially effective, and it is expected that the assault will resume when world trade picks up as the pandemic retreats. Research group BFAP has estimated that by 2028 imports will account for 33% of SA chicken consumption.
Calculations show dumping in excess of 300% from Germany, which means German chicken is sold in SA at a fourth of the price it would fetch in Germany itself; even lower than the cost to produce that chicken. Germany is not alone; two of its fellow EU countries are also subject to antidumping duties, in place since 2015. These are reviewed every five years, and at the time of the anniversary it was clear that a renewed application was necessary as the onslaught has only ramped up. In addition, five more countries, including four in the EU, have been implicated and are potentially liable for antidumping duties. One cannot ignore the irony of the developed countries supplying development aid to countries with one hand, and with the other hand decimating local industries with dumping. Ghana is one African example where dumping has destroyed the domestic chicken industry. Whereas Ghanaian producers used to supply 100% of local consumption 20 years ago, they now have barely 5% market share. The effects of unfair trade have to be further considered in the context of unemployment rates and poverty measurements. SA’s official unemployment rate stands at 30.8%, with 43% of people jobless according to the expanded definition of unemployment, which includes discouraged work seekers. This puts SA at the bottom of the list of the world’s major economies.source :