June 1, 2022

 

South African chicken farmers deny they are taking advantage of soaring prices

 

 

Izaak Breitenbach, the chair of the South African Poultry Association, said the country's chicken farmers are not taking advantage of soaring record poultry prices at the expense of consumers, Business Day reported.

 

Chicken prices in South Africa have gone up 10% per year over the past 10 years and increased 17% in the past year, but are expected to reach record highs due to rising input costs such as livestock feed. This is partly because of Russia's invasion of Ukraine, as both countries are major grains exporters used as chicken feed.

 

Breitenbach said soaring chicken prices are because of feed prices going up, as 70% of a producer's input costs come from feed.

 

The local poultry industry has struggled to compete against cheaper chicken imports from the US, Europe, and Brazil, with thousands of jobs lost in the sector.

 

The country's Association of Meat Importers and Exporters has urged the government to lift all tariffs and suspend the consumption tax on all poultry to lessen the impact of rising chicken prices on consumers. The association said domestic producers have unfair and excessively high levels of trade protection.

 

To safeguard the sector from unfair competition, the government increased duties on bone-in chicken pieces to 62% in 2020, while tariffs on boneless portions were hiked to 42%. Despite the fact that SA's trading partners account for less than 15% of all chicken consumed in the country, critics contend that raising tariffs will make chicken less cheap since local producers have traditionally priced their products higher.

 

While local producers support the elimination of VAT on some cuts of poultry used by low-income households, they are opposed to the elimination of tariffs, claiming that tariffs were not the reason of the price increase in the first place. Ebrahim Patel, Trade, Industry & Competition Minister is also opposed to tariff suspension, claiming that such a "extreme" action will result in the loss of local employment.

 

Importers are pressing for tariff suspension or elimination to maximise their own profits, not necessarily to safeguard consumers, according to Francois Baird, the founder of FairPlay Movement, an organisation dedicated to combating predatory trade practises and chicken dumping in South Africa.

 

Baird said the cheap prices at which chicken is imported are not passed on to consumers.

 

Baird urged importers to reduce profit margins in order to make chicken more cheap to customers, particularly those on a tight budget.

 

In answer to inquiries from Business Day, Paul Matthew, CEO of the Association of Meat Importers and Exporters, said that instead of banning imports, local producers should focus on alternative strategies to increase growth. He believes that imports, even in small amounts, are critical because they offer the essential competition to keep consumer prices in check.

 

The EU has previously stated that it will purchase South African chicken provided the nation has met the necessary health and safety criteria.

 

-      Business Day