FRANCOIS BAIRD: Government creating jobs in Brazil but not at home

A few months ago President Cyril Ramaphosa acknowledged what many have been pointing out for the past three decades. 

“We all know that government does not create jobs. Business creates jobs,” said the president in his state of the nation speech and went on to describe the key role of the government to create conditions that will enable the private sector to create employment. 

Yet,  job creation in SA is still mortally constrained, with unemployment hovering at an eye-watering 33% in the first quarter of 2023. 

However, the president’s assertion that the government had been taking “extraordinary measures to enable businesses to grow and create jobs” is not as hollow as it might sound. The government has been assisting to create employment. Unfortunately, those jobs are not being created here. 

Thanks to trade policies which have opened our doors to a flood of imported poultry products, for example, SA has effectively supported job creation in, and the economic recovery, of a country such as Brazil while our own economy — and poultry industry consequently — sheds jobs and fights for its life. 

Trade Data Monitor, a platform which collects trade data among nations, shows that imports of poultry from Brazil to SA skyrocketed from R2.2bn in 2020 to R3.3bn in 2021, leading to Brazil’s import market share soaring from 44% to nearly 73%. 

This trend is continuing, with local trade data showing that chicken imports rose for a fifth successive month through to March 2023, exceeding the imports of the same period in 2022. Though dropping slightly in April, the trendline remains upward with import volumes for the first four months of the year now the highest in four years. 

This level of competition from a country found guilty of dumping chicken in SA is crippling for SA poultry businesses. Independent surveys have found the SA poultry industry to be highly efficient, producing chicken more cheaply than all EU countries. However, no industry can compete with dumped imports. 

To illustrate the effect of such trade policies, from 2011 to 2017, about 9,000 poultry industry workers are estimated to have lost their jobs due to the dumping from other countries, including Brazil, the US and EU. 

Meanwhile, the SA Poultry Association has suggested that if the state made the right policy choices, the sector could rapidly create 30,000 jobs to add to the roughly 130,000 employed already, though that estimate came before the sector was hit with the perfect storm of predatory trade, soaring input costs and rolling blackouts. 

It’s a different story in Brazil where the poultry industry has exploded with revenue growing 26% year on year in 2021, growth which is underpinning Brazil’s economic and employment recovery post-Covid, aided by the governments of Brazil and SA. 

As far back as 2015, Brazil overtook China as the world’s second-largest poultry producer, behind only the US and over the past two decades it has more than doubled in size and seen exports grow by some 400% and become an increasingly important part of Brazil's total trade ledger. Brazil is now the world’s leading poultry exporter. 

The Brazilian Association of Animal Protein reports that the poultry production chain accounts for 5-million direct and indirect jobs in Brazil, about 5% of the country’s employed population, and those estimates predate the current boom during which Brazil has been registering record levels of employment, among the highest in nearly 20 years. 

But while the sector’s growth is beneficial for Brazil, it’s detrimental to SA poultry workers whose livelihoods are imperilled due to the influx of cheap, dumped imports and the other factors of inflationary input costs and energy availability. 

In August 2022 the government accepted the findings of an official investigation which concluded that Brazil was dumping chicken portions in SA, and recommended anti-dumping duties to counter this unfair trade. However, instead of implementing the duties, trade minister Ebrahim Patel delayed imposing them for a year. 

The timing could not have been worse for the domestic poultry industry. 

Fortunately, as that period of suspension comes to an end, there is an opportunity for minister Patel to claim an easy win by introducing the duties. By doing so not only will he enable the possibility of the private poultry sector rapidly creating new jobs, but he will also provide proof of life for the president’s vision of government’s employment-enabling activism. 

But, as importantly, the minister, as its author, will also be supporting the sector’s master plan in terms of which the private sector has invested well over R1bn as its part of the bargain to create a sustainable, job-creating industry. The government, on the other hand, committed to acting firmly against illegal trade and dumped chicken imports. 

Now it is time for the minister to match what business has delivered, despite the most pressing circumstances imaginable, and to do his piece in kind. 

Protectionism and free trade bookmark the two ends of the government’s policy options and while fostering international relations and trade are critical, the smart choice between those extremes should be found on terms which are fair, within World Trade Organisation rules and not at the expense of domestic industries and job security.

With the option to act presenting itself a second time, we urge minister Patel to choose SA over Brazil this time. 

• Baird is founder of the FairPlay movement.