Cheap imports threaten SA poultry producers

Johannesburg - South Africa's poultry industry is battling for survival in the face of stiff price competition from producers in Brazil, the European Union and the United States, as well as the worst drought in a century, the industry association said.

The June scrapping of 15 years of punitive duties on US chicken imports opened the door to 65 000 tonnes a year, adding to products from the EU and Brazil.

Though Africa's most industrialised country consumes the most chicken on the continent and local producers cannot keep up with rising demand, many are facing the threat of closure because of an import-driven price war, South African Poultry Association (Sapa) chief executive Kevin Lovell told Reuters.

"This year alone, more than 1 000 jobs have been lost and we are expecting that up to 4 000 more will be lost by the end of this year," Lovell said.

About a dozen smaller producers have closed or been sold, he added.

Domestic producers have long cried foul over cheap imports by overseas companies dumping bone-in portions, popular locally but generally considered undesirable by consumers in the US and Europe.

Other industry officials told Reuters that imported chicken costs much less than local produce, though the prices on supermarket shelves are the same.

"At the factory gate level it (the price difference) is substantial," Lovell said.

Leading South African producer Astral, based near Pretoria, has said that it had to cut jobs because of the record level of imports and rising feed costs as the region has been ravaged by drought.

South African crop planting, including yellow maize used in poultry feed, were hit hard by the drought, stoking inflation.

Poultry imports for the first half of 2016 totalled 288 081 tonnes, with the EU accounting for 45.5% and Brazil contributing 43.2%, the Sapa said. The remainder was mostly imported from the United States.

RCL Foods on Tuesday reported a 12.2% drop in full year profit, blaming an over-supplied domestic market and high feed prices.

"We are not enjoying a very level playing field in that space, so pricing is under a lot of pressure and feed costs are driven by the drought," said financial director Rob Field.

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