If the government makes concessions to America to allow more chicken meat to be exported to South Africa, it will not only impact South Africa’s broiler industry but could also affect the broader agricultural value chain, including grain and red meat farmers.
By Carien Kruger, senior journalist at African Farming and Landbouweekblad
The broiler industry is the largest customer of the South African yellow maize and soybean industries, says Wouter de Wet, Industry Head of Rainbow Chicken.
“When a country has a large broiler industry, it means its grain industry has a market close to home that will buy its products. Large volumes of cheap imported chicken that are opportunistically dumped also indirectly impact red meat farmers, because it’s a protein being imported.
“Local supply of chicken meat, which requires a strong local industry, is therefore not only in that industry’s own interest, but in the entire agricultural value chain’s interest,” De Wet said in an interview with the announcement of Rainbow’s first annual results after listing.
“If the local chicken industry loses sales volume, or its growth slows, it effectively means there is less room for local growth of our maize and soybean industries. Of course, there is the opportunity for these industries to export, but then the price must be low enough.”
De Wet emphasised that the local chicken industry is not opposed to chicken meat imports, but to dumping.
“We need protection against dumping. We compete competitively with major chicken-producing countries, such as Brazil and the United States. In terms of fertility and growth rate, we can stand shoulder to shoulder with them.
“The difference comes with feed costs, which are 70% of our input costs. This is where one must make the comparison. In America and Brazil, there is significant state support for developing the maize and soybean industries, which is not available in South Africa. When we start feeding the chick, we already begin with a disadvantage.
“We also have other higher costs, such as transport costs to get grain to feed mills and feed to the chickens, which is high due to our poor infrastructure.”
Quota Concession to the USA
De Wet says one must remember the history of the quota of bone-in pieces that America can annually import without South Africa’s anti-dumping tariff. “It was part of the negotiations in 2015, when the chicken industry took one for the team to ensure America’s doors stayed open to other South African sectors to enjoy the benefits of the American Growth and Opportunity Act (AGOA).
“With President Donald Trump’s announcement of the 30% import tariff for South African products, it means that the AGOA benefits effectively no longer apply.
“Therefore, we argue that the quota can also no longer apply. We don’t have a problem taking one for the team like we did ten years ago, but then our ministers must be able to demonstrate that there will be a benefit for the broader economy and that it will unlock value for other industries.”
South Africa has already conceded to the American chicken industry, allowing it to decide when its bird flu outbreak is under control and resume exporting to South Africa, as well as permitting states with no bird flu to continue exporting to South Africa.
Also read: Astral first in SA to vaccinate against bird flu
Vaccination Rules
Astral Foods recently started vaccinating chickens on only one of its breeding farms. De Wet says other broiler companies are very interested to see how it goes, but for Rainbow, there are still too many factors that make a vaccination programme unattractive.
“Even if we only vaccinate our grandparents, you may not export any of their descendants. For Rainbow, this is a problem. We export chicken meat to Southern African countries for many of our customers in the chicken fast food industry.
“Furthermore, should bird flu break out on a farm with vaccinated chickens, and the chickens survive better thanks to the vaccination and don’t need to be culled, those breeding chickens’ eggs may not be used for 10 weeks.”
De Wet said that the regular reporting of wild birds testing positive for bird flu in various parts of the country keeps the industry on edge. “Everyone makes sure they have spare capacity. A breeding flock that was previously kept for 60 weeks is now maintained for up to 68 weeks, allowing for extra production from the same flock.
“Rainbow furthermore invests continuously in biosecurity. When someone now comes to one of our farms, after they have ‘showered in,’ they literally walk in building tunnels from the showers to each chicken house, to ensure they have no exposure to any wild birds or anything from outside.”
