South African poultry industry in distress

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Avian flu threatens high chicken prices. Photo by Llindi Botha

by TINTSWALO BALOYI
JOHANNESBURG, (CAJ News) – THE massive drop in profits reported by the country’s largest poultry producer reflects the difficulties facing the South African chicken industry.

Astral Foods announced that profits for the first half of the financial year, to be announced later this month, will be down by between 87 percent and 92 percent from the same period last year.

The reasons cited are market conditions deteriorating due to record high feed input costs, high levels of load shedding and the general decay of municipal infrastructure continuing to impact operational efficiencies and costs negatively.

Astral reported in January that chicken cost R2 (US$0,11)/kg more to produce than it was selling for.

In addition, it has been spending R1 million a day on diesel for back-up generators.

The whole poultry industry is “distressed” according to Izaak Breitenbach of the South African Poultry Association (SAPA).

Small-scale and independent family-owned producers are reported to be bearing the brunt.

Francois Baird, founder of the FairPlay movement, said while the poultry industry is battling, chicken importers are advising the government to extend the suspension of new anti-dumping duties on chicken imports from Brazil and some European Union (EU) countries.

In August last year Trade, Industry and Competition minister Ebrahim Patel is said to have agreed that the five countries had been “dumping” chicken in South Africa, their actions were harming the local industry and anti-dumping duties were warranted.

However, Patel is quoted citing concern about food prices and decided not to impose those duties for 12 months.

Baird said poultry was a strategic industry that feeds the nation.

“Astral’s problems show why poultry producers need his support,” he said.

– CAJ News