Home Regions Southern Africa South Africa’s Poultry industry in crisis: stop exporting our jobs

South Africa’s Poultry industry in crisis: stop exporting our jobs

Modern chicken farm, production of white meat

Meat import volumes have increased tenfold since 2009, from about 3,500 tonnes to 30,000 tonnes per month

The South African agriculture industry is facing a silent crisis caused by the recent significant increase of chicken imports into South Africa.

Import volumes have increased tenfold since 2009, from about 3,500 tonnes to 30,000 tonnes per month. This unchecked influx arises from the North American and European markets’ preference for white meat, resulting in brown-meat cuts being dumped in South Africa – often at prices that undercut local producers.

The impact on the local poultry industry has been devastating, with reports of numerous farms being sold, operations discontinued and countless jobs lost.

If this growing flood of imports remains unchecked, it will result in the collapse of the local poultry industry. Due to the interdependence of various industries, such a collapse will be more severe than what is obvious at first glance.

For every 700kg of chicken on the shelf, one tonne of maize is required to feed the chickens. The poultry industry consumes a significant part of the country’s maize crop. According to the Animal Feed Manufacturers Association, the poultry industry is the largest consumer of locally produced feed, with maize representing 48{c59f2d9e93250d9a3f00f33c4784bba748f246721195afccc412c2cbc44f328a} of this consumption in the last quarter of 2016.

Job losses

The demise of the poultry industry will therefore severely affect industries such as grain production and handling, banking, insurance, agrochemicals, fertiliser, packaging, logistics and processing. As demand for products and services decreases, rationalisation will follow in these industries, resulting in significant job losses.

Such job losses will hit the already embattled South African population hard. The country’s official unemployment rate is 27{c59f2d9e93250d9a3f00f33c4784bba748f246721195afccc412c2cbc44f328a} and, when non-active job seekers are taken into account, the percentage increases to a staggering 36{c59f2d9e93250d9a3f00f33c4784bba748f246721195afccc412c2cbc44f328a}. For every employed person, 10 others depend on that person for their livelihood.

The agriculture industry does not only contribute significantly to the gross domestic product of the country, but is also responsible for job creation, especially in rural areas. The decline in opportunities for economic sustainability in rural areas will increase the rate of urbanisation and the costs associated with supporting this increasingly urbanised population, including pressure to produce economic growth and job opportunities in order to reduce poverty.

Food security will be compromised as a larger part of our population will depend on formal non-subsistence supply channels to provide them with access to safe, nutritious food.

Unfair competition

To survive, the local industry must be given the opportunity to compete with imported goods. Local production, however, faces challenges such as inflation; lack of proper infrastructure and basic services including inefficient rail operations; higher electricity costs; and complex labour legislation. South African producers also faced a significant drought during the past few years, which resulted in higher feed prices.

Farming conditions in South Africa are innately challenging due to the climate. Large parts of the country’s maize crop is produced on dry land in desert-like conditions and therefore the yield potential is lower than in many other countries. To overcome this challenge, most South African farmers run world-class operations, farming scientifically with great regard for the impact of their activities on soil health and sustainable production.

Competition is generally healthy and results in more efficient operations and, crucially, lower prices to the consumer. However, when the competition gains an unfair advantage, the ability of the local industry to compete diminishes. Agriculture is subsidised in many countries where chicken imports originate, resulting in cheaper feed and consequently their ability to undercut local pricing.

Most imported chicken is also sold below cost price as profits have already been made on white-meat sales abroad. This lends credence to the claims that imported chicken is being dumped in the local market.

Food security at risk

Bearing these factors in mind, how can our local industry compete sustainably against subsidised, dumped chicken imports?

Once local production capacity is destroyed, it will take years to recover. During that time, South Africa will become dependent on imported food. This leaves the country vulnerable to price increases from mobile exporters who will go where they can achieve the highest net-backs. This is why local production of food is such an important aspect of South Africa’s food security.

It is therefore questionable whether the recent cheap chicken imports really lead to lower local food prices. Are they in fact putting job and food security as well as the sustainability and self-sufficiency of the local industry at risk?

The long-term implications of unchecked chicken imports are significant. South Africa is “exporting” much-needed local job opportunities to international food producers while it increases the dependency of its people on jobs outside the agri-sector through increased urbanisation.

Strong political and industry leadership is now of utmost importance to introduce sustainable measures to protect our local industries, economy and people. This is not just a simple case of protecting the poultry industry – it has far-reaching implications for the greater agricultural economy and job opportunities. Time is of the essence, however, as the situation is unravelling rapidly and can only be remedied by fast, decisive action.