Chicken dumping comes home to roost

If the South African

government fails to level

the playing field, the

country’s entire chicken

industry will be gone by

December this year, says

Scott Pitman, managing

director of the consumer

division at major food

producer RCL Foods.

This after the publication

of the sale of 13 of its

farms in the Camperdown

region in Kwazulu-Natal.

The decision to sell the

properties was taken in

October last year.

“We’ve been speaking to

the government about the

problems in the chicken

industry for five years. But

we saw no light at the end

of the tunnel and decided

that to stay alive we had

to cut back on the least

profitable lines,” Pitman

says.

The farms, comprising

just over 1 000ha in total,

range between 10ha and

440ha in size, and are

valued at between R9

million and R60 million.

“We chose the farms near

the strategically important

N3 freeway to realise better

cash, which allows us to

survive for longer. We had

to create some breathing

space.”

While this is currently

zoned agricultural land,

Pitman says rezoning is

possible and the farms will

likely be converted into

light industrial zones and

storage facilities.

Pitman stresses that the

decision to sell the land

has nothing to do with the

global competitiveness of

the local chicken industry.

On the contrary,

he says research by

the Wageningen

University and

Research

Centre in the

Netherlands

shows that

South

African

chicken

is among

the cheapest

to produce in the

world.

RCL Foods

commenced a R194-

million downsizing of

its chicken business last

year, which delivered a

loss of R37.8 million. The

company says this was

due to the oversupply

of chicken in the local

market, driven by WTOoutlawed

chicken dumping

practices instituted by

foreign exporters, and

currently allowed by South

Africa’s trade policies.

RCL Foods’

Hammarsdale chicken

production output has

already been reduced by

50%, which has resulted in

the loss of 1 355 full-time

jobs. And other parts of the

RCL Group’s business

have also been negatively

affected.

“We make all our own

chicken feed at Epol, so

that part of the business

has been cut back, while

our logistics business,

Vector, has lost volumes as

well,” he explains.