The South African agriculture industry is currently facing a silent crisis caused by the recent and significant increase of chicken imports into South Africa. Import volumes increased tenfold since 2009, from about 3,500 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 into 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 being 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 700 kilograms of chicken on the shelf, one tonne of maize is required to feed the chicken. 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% of this consumption in the last quarter of 2016.
The demise of the poultry industry will therefore severely impact industries such as the grain production and handling, banking, insurance, agrochemical, fertilizer, packaging, logistics and processing industries. As demand for products and services decrease rationalisation will take place within these industries, resulting in significant job losses.
Such job losses will hit the already embattled South African population hard. South Africa’s official unemployment rate is 27% and when non-active job seekers are taken into account the percentage increases to a staggering 36%. For every employed person, 10 others are dependent on that person for their livelihood.
The agriculture industry does not only contribute significantly to the GDP 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 further 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.
In order 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 as well as complex labour legislation. South African producers also faced the challenge of significant drought during the last few years which resulted in higher feed prices.
Farming conditions in South Africa are innately challenging due to our climatic conditions. Large parts of our maize crop is produced on dry land in desert-like conditions and therefore the yield potential is lower than in many other countries. Too overcome this challenge, most South African farmers therefore 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 competition gains an unfair advantage the ability of the local industry to compete diminishes. Agriculture is subsidised in many countries where chicken imports originate from, 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 adds credence to the claims that imported chicken is being dumped into the local market. 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 us 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 our country’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 in question?
The long term implications of unchecked chicken imports are significant. We are “exporting” much needed local job opportunities to international food producers whilst we increase the dependency of our people on jobs outside of 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, our economy and our people. This is not just a simple case of protecting the poultry industry, but it has far reaching implications on the greater agricultural economy and job opportunities. Time is however of the essence as the situation is unravelling rapidly and can only be remedied by rapid, decisive action.
References: Animal Feed Manufacturers Association. 2016. Industry Statistics April 2016 to September 2016 report. [O]. Available at http://www.afma.co.za/industry-statistics/. Accessed 10 February 2017.
Source: Omnia Fertilizer