PIcture: ISTOCK
PIcture: ISTOCK

The government-led plan to reinvigorate the local poultry industry will not deter SA producers from agitating for the introduction of higher tariffs to protect them against imports, says RCL Foods CEO Miles Dally.

RCL, which owns Rainbow Chicken and Selati Sugar, said on Monday difficulties in its sugar and chicken business contributed to shaving off R1bn in profits in the year to end-June.

RCL and other poultry producers have partly attributed the underperformance of their chicken businesses to  imports. This has set the local producer industry on a collision course with chicken importers.

The SA Poultry Association, which represents local poultry producers, wants the International Trade Administration Commission of SA (Itac) to increase import tariffs on chicken to 82%.

The government, through the department of trade & industry, is spearheading the development of a “master plan” for the chicken industry and is meant to build a competitive chicken sector.

Speaking after the release of the company’s results for the year ended June 30, Dally applauded the move to develop the strategy. But he said the local industry still needed to be shielded from imports through the increase in tariffs.

“Chicken is being dumped from a number of countries including Brazil,” he said.

The Association of Meat Importers and Exporters has in the past denied that the imports were a result of dumping, whereby a manufacturer in one country exports its product to another country at an export price below the domestic price in the manufacturer’s own country.

Record levels of chicken dumping and an adverse sales mix due to the imposition of a sugar tax prompted a 55% fall in cash generated by operations during the period, with the group reporting an after-tax loss of R184m, down from the prior period’s profit of almost R878m.

Headline earnings per share plunged 60.8% to 37.9c, with the group slashing its final dividend by 60% to 10c a share. This brings the group’s total dividend to 25c, from the prior period’s 40c. SA’s economic environment remained subdued, with the group facing sustained pressure on its margins as it battled to hold on to market share amid declining prices for sugar and poultry, its statement said. 

Earlier in August the group said it had written down its sugar unit by R761.9m due to a bigger-than-expected effect from the imposition of the government’s sugar tax. 

njobenis@businesslive.co.za
gernetzkyk@businesslive.co.za