Dumping hits RCL’s sugar and chicken businesses
Chicken imports have grown by over 25% in the period, mainly from Brazil and America, says the company
RCL Foods, the owner of the Rainbow, Nola, Selati and Sunbake brands, on Monday bemoaned the influx of cheap chicken and sugar imports, which it said weighed heavily on its performance in the six months to December.
The listed food producer, which is 78% owned by Johann Rupert’s Remgro, is the latest company to express frustration about dumping, to the detriment of SA producers.
This follows the recent call by the country’s cement manufacturers for the government to introduce measures to
limit imports. In international trade, dumping takes place when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter’s domestic market.
"Chicken imports have grown by over 25% in the period, mainly from Brazil and America. Dumped imports remain a significant issue for, and component of, the local poultry market, representing over 25% of the market," the company said.
According to the SA Poultry Association, Brazil was the main country of origin for SA poultry imports in December 2018, with 57.3 % or 21,637 tons.
Chris Logan of Opportune Investments on Monday said Brazilian chicken imports to SA had spiked after a number of countries, including those in the EU, blocked Brazilian products amid concerns about salmonella diseases.
RCL CFO Miles Dally decried the continued dumping of sugar and chicken.
"We have not had the regulatory framework sorted out in that regard," he said.
Dally said chicken and sugar producers continued to lobby for government protection through their respective industry bodies.
RCL processes 700,000 tons of sugar a year.
"Chicken producers in SA are as efficient as their overseas counterparts. The product that comes here is dumped," Dally said. "You will never find a full chicken coming from America or Brazil. They would not be able to compete with us. They eat the breast meat in Europe and they send the portions to Africa.
"Nowhere in the world do governments allow that. So you need appropriate protection in place," he said.
Dally added that chicken producers in Brazil, the US and Europe are subsidised.
He said the government should consider measures to restrict imports. "It has been very frustrating. That is why two years ago we had to take the unfortunate decision to reduce our volumes because we were selling at a loss." This had led to 1,300 people losing their jobs.
"The trading conditions in retail and wholesale have been really tough. The consumer remains under pressure."
In the six months ended December 31, RCL’s headline earnings dropped 26.3% to R475.1m. Margins across the group were also dented by higher commodity and transport costs, RCL said.
RCL’s share price was up 4.81% to R13.50 on Monday.