‘Import protectionism won’t save local industry – export growth can’

South African poultry
producers are
feeling the pinch as
additional imports
from the United States (US) –
negotiated under the African
Growth and Opportunity Act
(Agoa) – shrink their market
share. And major producers,
such as RCL and Astral Foods,
are reporting serious revenue
losses.
CEO of Astral Foods, Chris
Schutte, said: “Last year we
posted record results, but we
have seen deterioration in
profitability. The impact of
the severe drought gripping
the country and the imbalance
in supply and demand of
poultry caused by excessive
levels of imports, have placed
tremendous pressure on the
poultry division’s results.”
South African Poultry
Association (Sapa) CEO,
Kevin Lovell,
told FTW
that currently
one of the big
companies
was closing an
abattoir in the
North West
Province. “A
medium-size
producer that
has operated
for 40 years
is shutting
up shop,
while others
struggling to
pay suppliers
are likely to fold soon. Even
big producers are so stressed
they are running out of
external storage space to store
production,” he said.
According to Lovell,
“importers are job stealers,
while local
producers are
job creators”.
He pointed out
that at least
12 businesses
had gone out
of production
in the past
few years, at
least three
more were
not expected
to make it
through this
year, and
most major
producers had
more cutbacks to come.
“The result is that there
could easily be as many as
12 000 direct and indirect
jobs lost before year-end
to add to the thousands
lost so far,” said Lovell. He
questioned the fact that
developing countries needed
to make do with leftovers
from the developed world.
“As leftovers are often sold
at discounted prices that
reflect their scrap value – not
their production costs – these
imports arrive in South
Africa at way below the
normal cost of production.
Clearly, producers find it
difficult to compete in such an
environment,” said Lovell.
He commented that trade
policy was not for the fainthearted.
“It is a brutal form of
Trumpism, often glossed over
with genteel manners and
deceitful economics.
“If we are to reset our
economy and maintain
current employment in the
chicken industry – and
others – we need to
toughen up on trade
and accept that we will
need to be at least as tough
as those with whom we
negotiate trade agreements,”
Lovell said.
Consumers’ rights, however,
must also be taken into
account cautioned Stephan
Brink, import manager of
Brito’s Group of Companies
and general manager of Brito’s
Food International.
He pointed out that sectors
of agriculture, including the
poultry industry, struggled
from the outset to compete
in a global free market sans
government subsidies and
government assisted price, as
well as supply and demand
fixing.
“Sadly, two decades on and,
unlike most other sectors
of the local animal protein
industry, the poultry industry
has refused to collectively
revisit its business model,
investigate carcass and
portion subsidising, or make
a concerted effort to conform
to the international health
and sanitary requirements
(as imports do) to open and
access new export markets,”
said Brink, adding that
instead, it had only relied on
“continuously demanding”
protectionism via excessive
import taxes.
INSERT
Unlike most other
sectors of the local
animal protein
industry, the poultry
industry has refused
to collectively revisit
its business model.
– Stephan Brink