Impact of poultry regulations will be known in February

City Press, 22 January 2017
By Riana De Lange

Johannesburg - The beleaguered poultry industry says it will only know what impact the new regulations that restrict the amount of brine allowed in frozen chicken pieces have had by the end of February.

The regulations, which restrict brine in frozen pieces to 15% of the total weight, came into force on October 22 last year.

The North Gauteng High Court ruled in September that poultry producers had had enough time to change their recipes to comply with the regulations, which had been announced in the Government Gazette in April.

Kevin Lovell, CEO of the SA Poultry Association (Sapa), told Rapport, sister publication of City Press, that Sapa would not be pursuing further court action on the matter.

He said although the regulations had been in force since October, chicken pieces with a higher percentage of brine that had been produced before this date could still be sold.

This stock was probably in the system up to December. Traditionally, December is a good month for chicken sales.

On the other hand, January is traditionally a bad month because of consumers suffering after their Christmas spending.

Lovell said that by the end of February, the industry would therefore have a better indication of the impact of the new regulations on a good as well as a bad month.

In the meantime, the industry is “waiting and hoping”. It is also experiencing major pressure owing to large volumes of imported chicken that are distorting local prices. This has led to a recommendation by the International Trade Administration Commission (Itac) for import tariffs on chicken pieces that come to South Africa from Europe.

Comments on this recommendation by role players should have reached Itac last week, but a decision could only be expected in a few months’ time, said Lovell.

Itac’s investigation on whether the import tariff should increase further came after government last month imposed a protective tariff of 13.9% on frozen chicken pieces imported from the EU. The tariff will be in force until July 3.

The problem for South African chicken producers is that most of the pieces imported from the EU are entering South Africa tariff-free, in accordance with the economic partnership agreement between the EU and the Southern African Development Community, Afrikaans news site Netwerk24 reported earlier.

Local chicken producers have been complaining for some time that EU countries are dumping the pieces that are less in demand in their markets on South Africa.

Local producers got some relief thanks to an import ban on poultry from seven EU countries owing to concerns of bird flu, but Lovell says the reprieve is only temporary. Furthermore, the South African chicken industry cannot build its success on the adversity of another.

Meanwhile, Cosatu is demanding an urgent meeting between organised agriculture, the labour sector and government to come up with a more comprehensive solution to ensure the sustainability of the country’s chicken industry.

Sizwe Pamla, national spokesperson, said they were upset by the 13.9% tariff being the only plan government had come up with thus far. It is not enough, if one takes into account that, in the long term, 50 000 jobs could be lost if the country’s chicken industry perishes, he said.

Cosatu has reiterated its fears that if government doesn’t actively do something to protect the industry, it could go the same route as the country’s textile industry, which has almost bled out since the 1990s.

Cosatu’s comments follow on the announcement by Rainbow Chickens that it would have to let more than 1 300 farm workers go and shut down various farms in Hammarsdale in KwaZulu-Natal owing to unfavourable conditions in the industry.

Pamla said in light of South Africa’s high unemployment figures (27.1% in the third quarter of last year), the country could ill afford any job losses.

Government must also find alternative export markets for locally produced chicken products, subsidise farmers and help with lower tariffs for electricity, as well as with equipment, seed and fertiliser, Cosatu proposed.

A further plan by Cosatu was to give farm workers and employees in the food industry shares in farms and food producers.