Still no support for local industry in wake of bird flu outbreak

Deputy President Paul Mashatile promised a support package for affected farmers a month ago, and Minister of Trade, Industry and Competition Ebrahim Patel asked for an urgent investigation into creating a rebate on poultry imports almost two months ago.

In the meantime, local producers started importing hatching eggs to alleviate the shortage.

Shortage or no shortage?

The Association of Meat Importers and Exporters (Amie) on Tuesday warned consumers that there will be a “ramp up” in poultry prices over the festive season and into the new year.

This is due to the cumulative effect of the shortages caused by the bird flu outbreak and the inability of the government to introduce a rebate on import tariffs timeously, says Paul Matthew, CEO of Amie.

Matthew says every effort is needed to keep poultry prices down. “Government’s mandate is to act on behalf of its citizens, and this requires it to do all it can to ensure that the country is food secure, and that the poor are able to afford poultry.”

The South African Poultry Association (Sapa) says there will be no poultry meat shortage due to avian influenza. Sapa general manager Izaak Breitenbach says the first eggs arrived in early October.

A total of 100 million fertilised eggs will be imported over the next four months. The eggs are used to produce day-old chicks, and in turn, the day-old chicks are grown out for five weeks before being slaughtered. “These actions by the industry have negated the biggest impact on price,” he says.

Matthew believes price increases will be “inescapable” unless government takes action.

Since the eggs have been imported on an urgent basis (and flown in by air), they are coming in at three times the price of a locally grown day-old chick, he adds.

Breitenbach refutes this statement. “Although more expensive than locally produced eggs, this price is diluted into the production cost of the whole bird.”

The poultry industry is acutely aware of the consumer’s plight, and therefore imports vast amounts of hatching eggs, he adds. “Importing the eggs would be a far cheaper option than to import a whole chicken or chicken portions.”

Government efforts

The International Trade Administration Commission (Itac) said on Tuesday that the investigation process to consider creating a temporary rebate on poultry products is ongoing. “Once a decision has been made, it will be communicated via a press release and uploaded on the Itac website as usual.”

Matthew says despite an “urgent two-week call for comment” on the rebate, everything has now gone quiet. “It’s nearly December, and there is no sign of a decision from Itac.”

Breitenbach adds that the rebate wants to address a shortage of chicken in the market that does not exist. It will also not impact prices as importers sell at market prices. Since the rebate has not been announced, the “cheaper” imports will arrive too late to address the perceived problem.

“Imported meat is a poor substitute for local production and more so now that the ports are overwhelmed, and significant delays are occurring in offloading imported product,” notes Breitenbach.

Since there is no solution in sight to the port delays, a rebate to stimulate poultry meat imports would be a poor solution to balance supply and demand. The chicken meat will be delayed on the water for up to 16 weeks.

Regressive tax

Matthew believes it is time for Patel’s department and Itac to realise that import duties are an extremely regressive tax. It impacts consumers most directly.

He said the 62% import duty on bone-in chicken introduced in March 2020 should have been a temporary measure, but it has been institutionalised at the expense of consumers.

“It is high time that the entire narrative on chicken availability and imports, as well as tariffs, is changed. Where there is legitimate dumping, it must be addressed, but extreme import tariffs on all imported chicken is not the answer.”

He adds that imports are a critical and necessary measure to ensure the country has sufficient supplies of vital protein to feed the nation and to plug gaps in supply. – moneyweb.co.za