Neva Makgetla ("Chicken imports have benefited the poor", Business Day, 17 January) seems to ignore a basic economic principle of making enough profit to make business worthwhile. How much profit is debatable, but it is must be more than the local industry is able to realise right now, or else we would not be closing operations, retrenching staff and cutting back.
You cannot prioritise cheap over employment and you cannot import a country to economic growth; jobs are a national imperative. We employ more people than similar sized EU companies, resulting in economic growth with employment, not jobless growth. If we mechanised processing more, we could have a similar cost profile but a much smaller workforce, something government and the unemployed would not want.
Rather than tariffs, we are asking for a safeguard, a mechanism designed to deal with a shock to the system. In 2009, the EU supplied less than 0,5% of the bone-in products, yet today they supply more than 80% of these -and the total market has grown dramatically. The safeguard will only apply to these products that make up less than half the total poultry imports, with plenty of dumped product still available for importers as bone-in portions from other markets will be excluded.
Our production costs are not "scarily high". In fact, we produce for less than the EU and Thailand, slightly more than the US, and more than Brazil. The cost differences are almost solely due to feed ingredient prices, not our actions. The reality is that imported products tend to be sold at prices similar to local products, so consumers don’t get cheaper chicken while local chicken prices are suppressed. This leads to industry failure.
Chicken production worldwide is based on a US model. One similarity is that our industry also has a few big players in all major markets. Like all other industries in South Africa, transformation is not complete, but when it is, there will still be a few companies producing most of the food — all that will change is ownership and the workforce demographic.
What is clear is that it makes no social, political or economic sense for poor people to bear the cost of allowing the biggest segment of SA agriculture to fail because foreign producers can dump their products here. We do agree that unfair constraints to growth should be removed, with one of these that SA should no longer be a top ten global importer of poultry waste. That is all we need.
Yours Sincerely
Marthinus Stander
CEO Country Bird
Chairman, Broiler Organisation
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