Importing chicken will not save the day price-wise for South Africa due to rand weakness, according to Paul Matthew, the CEO of Meat Importers & Exporters (AMIE).
He said this week that the ultimate reality was that imported chicken was no longer affordable because of the depreciating rand and increased duties.
On Friday, the rand was trading at R19.5168 against the bullish US dollar as emerging market currencies took strain this week.
“It is also extremely unrealistic to think that the world is waiting to assist South Africa with cheap poultry. Our local food service businesses have specific requirements and approval processes that take time to be negotiated, and these cannot be substituted with imports overnight. Worldwide, producers are cutting back on production. Additionally, our authorities are slow to open markets after avian flu outbreaks with stifled negotiations,” Matthew said.
He was commenting as, this week, South Africa woke up to the rude reality of not being able to freely purchase eggs as the highly pathogenic avian influenza (HPAI) spreads in the country.
The rapid spread of the new strain of bird flu – HPAI H7 – is seriously impacting the poultry industry.
The new strain is reported to be more deadly and spreads more rapidly than the other major strain that has been present in South Africa (HPAI H5).
HPAI H5 is the strain responsible for the bird flu outbreaks that most countries have faced. This latest outbreak is by far the biggest that local commercial poultry production has experienced. Gauteng is by far the worst affected province, accounting for more than two-thirds of reported cases, with most cases being on layer farms.
The province produces about a quarter of local egg production per annum. The pestilence is expected to keep egg prices elevated due to table egg shortages.
Chicken is South Africa’s most affordable meat protein and accounts for 66% of all meat consumption. It is a staple food in poor communities, and continued supply is essential.
Approximately 7.5 million birds have been lost due to HPAI, according to the South African Poultry Association (Sapa).
Trade and Industry Minister Ebrahim Patel, on Tuesday, asked the International Trade Administration Commission of South Africa (Itac) to decide whether the temporary relief should only be applicable to ordinary customs duties or whether anti-dumping levies should also be removed, according to a Government Gazette notice.
However, Anthony Clark, an independent analyst at Small Talk Daily, said in a note earlier this week: “Should Itac agree, and that’s not a given, any increase in poultry imports to meet any domestic poultry production shortfall will only realistically – given supply chain logistics, ports and State vet checks – only occur into late-December 2023 into January 2024.’’
He said If imports did rise, he could not see material volumes suddenly flooding into South Africa as the trend did not support that. Even during the tariff suspension from August 2022 to August 2023, accumulated imports were not significant.
“Given the “rebate” is only requested for the duration of HPAI, industry experts assert HPAI should be under control within 12-months with a fast-tracking of vaccination dossiers currently underway,“ he added.
Clark explained that the main rise in the past months in terms of tonnage imports had been in mechanically de-boned meat (MDM).
South Africa produces negligible MDM, so all must be imported to produce polony, Russians and Viennas, for example, with Brazil being the main exporter.
He said, according to the latest available SARS/SAPS stats, of the R314 million of poultry product imported, MDM was R108m, offal was R68m, with the value-added frozen chicken bone-in product at R101m or 32% of all imports.
Matthew also pointed to low imports, saying that the South African poultry industry was disingenuous when it came to imports.
“They were quoted this week as saying that importers had reacted to the outbreak by importing more chicken, and that imports could be as much as 50 000 tonnes per month. I really don’t know where they get these figures from because the latest import statistics show that August 2023 total poultry imports (excluding MDM) were around 11 000 tonnes, and the bone-in imports were around 3000mt.’’
Efforts to stop the spread
The Department of Agriculture, Land Reform and Rural Development is looking at the possibility of a vaccination to contain the spread and impact of avian influenza.
However, a vaccination programme against bird flu would not bring an immediate end to shortages of eggs and chicken meat, Sapa has warned.
Sapa’s Izaak Breitenbach said egg shortages were already being felt, and the reduced production of local chicken meat would be felt in six to eight weeks’ time.
He expected chicken imports to increase to supply local demand, particularly in the peak months of November and December. Egg imports were impractical because of the lengthy shipment period, he added.
Frozen chicken portions were being imported from Brazil and the United States, and bird flu restrictions had been lifted from Ireland, Spain and Argentina, allowing them to resume exports to South Africa.
Broiler breeders would be importing 21.5 million fertile hatching eggs, but this would only make a small contribution to South Africa’s chicken meat supply. The country normally slaughters 21.5 million chickens a week to meet local demand.
“This problem is not going away tomorrow. It will take us six to 18 months to replace the stock that we have culled to date. Some producers are reluctant to restock immediately, as their new replacement stock might have to be culled,” Breitenbach said.
Government is trying
Agriculture, Land Reform and Rural Development Minister Thoko Didiza, met with the retailers on Monday to discuss the impact of bird flu in South Africa.
This follows a meeting held with the South African Poultry Association last Friday and engagements that have been taking place between government officials and the industry.
During the meeting, Didiza briefed retailers on the containment measures that have been taken to limit the spread of the disease, as well as possible solutions to manage such outbreaks in the short and the medium-term, including vaccinations.
It was evident from (Monday’s) engagement that the main challenge is primarily on the egg production side, where there are supply constraints in some regions of the country. In response to this challenge, the Minister is focusing on measures to improve the availability of egg supply to consumers and simultaneously putting measures to contain the spread of the disease.
“Moreover, the Minister is embarking on the efficiency improvement in issuing import permits for egg products to ensure sufficient supplies for consumers. In addition, the Minister is looking at the possibility of vaccination and currently reviewing applications by various suppliers,” the department said in a statement.
On the broiler side, Didiza and Trade, Industry and Competition Minister Ebrahim Patel are assessing some trade instruments to ease the supply of chicken meat.
However, according to Fred Hume, the managing director of Hume International, an import/export company, unless South Africa is prepared to accept a future where chicken become a luxury foodstuff, it cannot be business as usual in the face of the unprecedented avian flu.
The South African government needs to adopt a much more nimble approach to local production and international trade.
He said, “This is urgent. We need to work out – everyone in the industry – how to meet and mitigate the shocks to food security in South Africa. There should not be annual cycles or long-term investigations and reports. When our local industries are in trouble, we must open up to imports. And when our local industries recover, we can go back to supporting local production.”
”The Poultry Master Plan must be re-looked and reworked. It is imperative that duties are automatically suspended for a period of at least six months in the event of more than, for example, X million birds being culled as a result of HPAI, and this needs to be recorded in the Master Plan. We cannot afford to negotiate temporary suspensions on what may soon be an annual basis considering the frequency of outbreaks of HPAI around the world,” Hume said.
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