EDITORIAL: Zero rating chicken will benefit farmers and consumers
In the current environment trade measures could pluck the last few feathers from the near-naked carcass of the embattled local poultry sector
Food security is not just about the availability of food. For a country to be food secure people also have to be able to afford the food that is available.
Last week social media platforms spread word of a clever ad campaign published in newspapers in Australia and the UK. The ads showed a price comparison between popular groceries here at home in Checkers stores and in UK and Australia supermarkets. For example, the advert featured fresh whole chicken, which retails for about R60/kg at Checkers compared with R80/kg at Coles in Australia.
The advert gets one part of the story right; the cost of living is about 2.5 times more expensive in Australia than in SA. But what it does not take into account is average incomes and purchasing power, which changes the picture considerably. The average monthly income in SA is about $550; in Australia it is almost 10 times that.
So just because chicken is cheaper in SA doesn’t mean it is more affordable. This is why SA, though theoretically a food secure nation, suffers from a high level of household food insecurity at about 25%.
It is no surprise that when the question of food affordability is raised in SA the conversation often turns to chicken. This versatile bird is by far the largest source of animal protein in SA. According to the Bureau of Food & Agricultural Policy, South Africans eat about 35kg of chicken per person per year.
Beef is a distant second at about 12.5kg, followed by eggs (thanks again to chickens) at about 8kg. Pork comes in at just more than 5kg per person per year and mutton at about 2kg.
Chicken’s importance as an affordable source of protein is one of the reasons trade measures that offer protection for local industries such as poultry farming can be controversial.
While they might offer protection against unfair subsidies provided to producers in exporting countries, the problem with these tariffs is that they do little to address local challenges that make it harder for SA producers to compete with their peers in countries that want to export to us.
In the short term tariff protection offers little benefit for the consumer, who usually ends up paying more for a product such as bone-in chicken portions because of tariffs.
As food inflation started to rise to record levels last year poultry importers, represented by the SA Association of Meat Importers & Exporters, called on government to scrap all existing import tariffs on chicken products and place a three-year moratorium on new tariffs. This, the association said at the time, could save consumer about 33% on prices of bone-in chicken products.
Since then life has only got harder in SA. Load-shedding has intensified to the point where it is now a constant disrupter of lives and livelihoods, and despite aggressive interest rate hikes inflation has moderated only slightly, but not for food.
In December annual consumer inflation came down marginally to 7.2% (from 7.4% in November) while inflation on food and nonalcoholic beverages jumped to 12.4%. Chicken products, such as the bone-in, frozen portions many South Africans rely on, were among the food products that saw the highest rates of inflation.
This does make it tempting to raise the issue of import tariffs again, but in the current environment such a move could also pluck the last few feathers from the near-naked carcass of the embattled local poultry sector.
Just last week SA’s largest poultry producer, Astral Foods, sounded alarm bells when it said rising input costs caused by load-shedding and high feed costs had seen its cost of production increase to R2/kg above the current selling price.
One of the solutions Astral proposed, in rare agreement with poultry importers, is for the government to scrap VAT on bone-in chicken portions. Eggs are already on the list of zero-rated food products, but apart from canned pilchards there is no meat on the list.
The DA started advocating for bone-in chicken to be included on the zero-rated list before the medium-term budget last year, saying this would cost the government about R3bn in lost earnings, which all things considered sounds a small price to pay to help chicken farmers keep the doors to the national coop open and allow poor households to stretch food budgets further.
The egg is in the court of finance minister Enoch Godongwana.
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