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Local chicken producers and importers are arguing over the potential impact that import tariffs could have on South African consumers, jobs and rural development.
Local chicken producers and importers are arguing over the potential impact that import tariffs could have on South African consumers, jobs and rural development.

Predatory imports are killing small chicken firms


By Chairman Lines - Jul 29th, 11:01

Local chicken producers and importers are arguing over the potential impact that import tariffs could have on South African consumers, jobs and rural development. 

Meanwhile, the informal sector of the industry is taking impossible strain, as illustrated by the stories of four emerging chicken entrepreneurs whose growth potential is being smothered by market conditions.

There is more to South Africa’s chicken industry than its large producers. These contribute massively to the national economy and the economies of the rural areas where their operations are. Nonetheless, they are only 80% of our country’s chicken story.

The other 20% include thousands of subsistence farmers whose business fortunes are subject to the slightest change in market conditions.

Riaz Tayob, for instance, supplies halaal chicken to a customer base in Erasmia, Pretoria. Prepared according to individual specifications, orders are delivered to customers’ doors. Tayob processes about 2000 chickens a month, employing six workers.

Clive Tigere distributes day-old chicks in Limpopo. His customers are small-scale broiler farmers who raise birds to sell, either live or freshly slaughtered, to rural households.

“Last year, orders were through the roof,” says Tigere. “I moved up to 100000 chicks a week.”

He accumulated cash and then invested in a few incubators - finally building a hatchery that can supply 20000 chicks a week.

According to Tigere, a qualified statistician, Limpopo has a “massive” informal chicken market.

“There are thousands of broiler farmers locally.”

The province has only one hatchery, so small farmers get their chicks from hatcheries up to 600km away.

“I would expand my operation, but my market has drastically reduced.”

From a base demand of 40000 chicks a week in 2018, these days Tigere moves only 12000 a week - a clear indication that his customers are losing their customers. He blames a flood of predatory imports, a view confirmed by a close friend who runs a store in a township outside Louis Trichardt. “He tells me they mostly sell imported chicken now.

And the reason imports are gaining a foothold?

“Price is everything here. Local farmers simply cannot beat importers’ prices.”

Clement Pilusa, whose farm outside Pretoria carries 12000 broilers at any given time, says predatory imports are hurting him too.

“Even the restaurants that buy whole baby chickens have started to buy frozen imports too. We can’t grow.”

Pilusa recently bought his own land and plans to build six more chicken houses. Restaurants aside, his main customers are hawkers who sell live chickens to township households.

And while this market used to be secure because of cultural practices and consumer preferences, price pressures are increasing. To compete, Pilusa hopes to bet on economies of scale.

The shrinking whole-bird market is also the reason Limpopo-based Livhu Nengovhela wants to diversify. He mainly supplies resellers who sell live chickens to households.

The stories of these entrepreneurs share a common theme: the impenetrable ceiling caused by predatory imports. As dumped chicken flood into supermarkets, wholesalers and spaza shops, independent producers are trapped in niche markets - which are slowly but surely shrinking.

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