LETTER: Expansion into export market is vital to poultry master plan
Balancing imports of brown meat with exports of white meat will help our local poultry industry to be competitive
The SA Poultry Association believes the local poultry industry can prosper, create jobs, provide affordable food for SA consumers and contribute towards economic growth only if imports of chicken products are curtailed or limited (“Cutting imports will help poultry sector grow and create jobs”, January 25). The obvious way to do this, the authors of the article imply, is through tariff interventions or restrictions. They conclude that domestic production needs to be prioritised.
We agree completely that domestic production needs to be prioritised and developed, but we do not agree that limiting or restricting imports is the way to do it. The call to replace the import spend with investment in job creation is a noble one, but in an industry that is moving towards automation, how feasible can it be?
Instead, imported chicken products fill a gap in our market. South Africans prefer the brown meat of the chicken (thighs, drumsticks, wings), while Europeans prefer the white meat. Without imports there would be a shortage of the brown meat and a glut of white meat. It makes sense, therefore, to allow imports to meet any extra demand.
The poultry industry is already calling for an increase in the price of chicken, and the call to limit imports is perhaps being used as an excuse to justify that demand for a price rise. At the moment the industry is dominated by five large producers, who together control 75% of the market. Cutting imports will only increase their hegemony.
Calling for import restrictions, tariff protection and price increases is really just protectionism, and this actually raises the cost of chicken to the consumer. We believe this is not the way to grow the industry. We need to ask the question: with protectionism, who is being protected — the customer, or the large producers?
As an example, when Botswana banned chicken imports from SA due to a bird flu outbreak in 2019, there were shortages of certain products in that country and prices increased. If SA also banned imports, would the same thing not happen?
The poultry master plan, which was signed by a number of industry roleplayers at the end of 2019, already deals with the issue of tariffs, imports and pricing. As the Association of Meat Importers and Exporters we are also part of this plan. Our overriding goal is not to limit imports, but to expand exports.
SA has a duty-free trade agreement with the EU to export. Chicken breasts are a premium cut that will attract a premium price for the local producers. The opportunity to expand into the export market truly needs to be seized by local producers as this is the essence of the poultry master plan. This tactic has worked well for exporters such as Brazil, which have crafted an exceptional chicken meat export market that has become attractive to other nations.
Balancing imports of brown meat with exports of white meat will help our local industry to be competitive. The question is why local producers do not expand their exports. If they adjusted their strategy and used this model it would definitely create more job opportunities for South Africans.
The poultry master plan sets out a number of interventions to develop the industry in SA, and we believe one of the most important of these interventions is to assist small chicken producers to access the market. When SMMEs are supported and recognised they too can create job opportunities for others. However, the dominance of the five large companies creates high barriers to entry for new or smaller poultry farmers. The most effective way to empower our farmers, reduce the cost of chicken, and include more players in the economy, is to lower those barriers to entry. We are hoping that the poultry master plan is the right mechanism to do this.
The poultry industry does not need to fear competition from imports. What it needs to do, urgently, is open the sector to new, emerging and informal chicken producers and expand its export market. It will make chicken more affordable and more popular, will increase demand while encouraging small-scale production, and will make the poultry industry more diverse, more inclusive, more sustainable and more international.
CEO of the Association of Meat Importers and Exporters
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