Chicken wars are getting personal in South Africa

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The FAO’s Food Outlook estimates overall meat trade at 30.6 million metric tons in 2016, of which poultry was 12.7 million metric tons, an increase of 3.5 percent from the 2015 figures. Interestingly, in terms of volume, much of the increase in imported and exported poultry from 2015 to 2016 will have come from developing countries, which is likely to be the trend over the next few years as the developing countries populations continue to grow rapidly.

According to Poultry Trends, a statistical publication for the sector, developing countries would have at the end of 2016 imported approximately 38 times more metric tons of poultry meat than in the previous year compared to developed countries, driven by rising domestic consumption and low international prices, against the back of higher local production costs all leading to increased import demand. 

So what does this mean for the sustainability of the poultry industries in those latter countries?

This influx of poultry meat into developing countries has of course been the subject of some developing countries’ ferocity, with allegations of dumping being reported and consequent measures being imposed. In South Africa for instance, the Department of Trade and Industry (DTI) recently approved a 13.9 percent safeguard duty on imported European bone-in chicken.

This is following concerns from local industry stakeholders that the high level of imports is hurting local producers.

RCL Foods, which is the country’s biggest poultry producer and operates across six sub-Saharan countries, is planning to close 15 of its 25 South African farms at the end of January 2017, with job losses estimated at 1350, according to the Daily Maverick.

While the imposed duty is anticipated to cushion local producers from the effects of the poultry imports, the increase has been inadequate and local industry has since applied for a 37 percent safeguard duty on European bone-in chicken imports, motivated by fears that the latter duty has not eased the strain on producers, resulting in plants being closed and workers retrenched.

The figure of close to 40 percent is believed to have a better chance of leveling the playing field and allowing local producers to produce under more favourable conditions. Should this increase be approved, this will come as a relief for major local producers who are struggling to maintain profitability.