The Brazilian poultry export sector is like a rich but embarrassing relative.
No-one in South Africa wants to talk about Brazil, we resent Brazil’s success, our local producers name Brazilian imports as ‘unfair’ – but whenever there is a disturbance in the global poultry industry, everyone expects Brazil to bail them out.
So the news that Brazil has had to limit exports because of Newcastle disease (the first case detected in Brazil since 2006) should send tremors through the global poultry industry.
While South African poultry producers might view Brazil as a competitor, the truth is that we cannot survive without imports. Whether they come from Brazil (which supplies over 95% of our mechanically deboned meat, the mainstay of our processed-meat industry), the USA or the EU… without imports our domestic prices will not be cushioned from global or domestic shocks and our local chicken prices will become extremely unstable.
The solution is to expand our local industry by empowering small and emerging farmers; examining our entire value chain to eliminate protectionism and unfair competition; developing our support industries like feed crops; reinforcing support networks like transport and infrastructure.
Some of these initiatives are already underway, and the new Ministers of Agriculture and Trade and Industry are new brooms that have the potential to support the rest.
The rising price of chicken, therefore, is not because of unfair competition or imports, it is because of a closed and concentrated industry that lobbies against competition and expansion
Consumer News
Since COVID, loadshedding and Avian Flu, there are increasing calls to zero-rate VAT on chicken. President Ramaphosa is being urged by a number of civic lobby groups to consider this move. However, some economists believe that it would only be a short-term measure with limited benefits and that a much longer-term and fundamental change to the entire industry is required.
Consumers, on the other hand, are voting with their wallets and buying cheaper chicken products, tinned fish and peanut butter to make ends meet.
This makes nonsense of commercial producers’ claims that the tariff rebates on imports harm them, as consumers are not buying increased volumes of imported cuts.
Industry News
Globally, demand for poultry meat is expanding. This is both good news and bad news for South Africa.
On the one hand, going into poultry farming is a good plan for local emerging farmers, but they will be hampered by the current barriers to entry such as high energy and feed costs, collapsing infrastructure, protectionism within the local industry and unreliable support services.
International News
Our relationship with US poultry producers is largely covered by our AGOA agreement. Our Minister of Trade, Industry and Competition is currently in the US to discuss AGOA.
This interesting article gives insight into the US poultry industry, and inadvertently gives some insight into our local issues, such as the important link between grain and soy production and poultry production.
Agricultural News
An important court judgment has put the cat among the chickens by sending the government refusal to pay compensation to farmers affected by AI, back to the drawing board.
While this does not automatically force government to compensate businesses, it does re-draw the process.
At the end of the day, though, the issue remains whether government has the funds to compensate farmers.
Support Industry News
Despite headwinds, some entrepreneurial individuals still manage to run successful small chicken farms. Here is an inspiring story.
Read our Explainer on Black Soldier Fly Farming
A Closer Look – July 2024