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Global factors lift SA's poultry producers
Global factors lift SA's poultry producers

Global factors lift SA's poultry producers

FMCG SUPPLIER NEWS

By Ann Crotty - Mar 29th 2017, 15:14

Avian flu in Europe and tainted-meat scandal in Brazil help reverse local poultry producers' fortunes 

Avian flu in Europe, a tainted-meat scandal in Brazil and lower feed costs in SA have helped to reverse the outlook for local poultry producers and push their share prices towards two-year highs. Closer ties with the government are also expected to help as moves are made to develop more job opportunities in the local industry.

Eight of the 10 EU countries that are certified to export poultry to SA have been hit by an outbreak of avian flu. The reduction in imports volumes in December and January is expected to continue for another few months. But local producers say the reduction could last longer if the Department of Agriculture, Forestry and Fisheries monitored the situation.

Kevin Lovell of the South African Poultry Association (Sapa) said European producers generally start exporting again about four months after an outbreak. "In terms of international standards as soon as European producers declare themselves to be free of avian flu they can resume exporting," he said.

SA does not have the regulatory capacity to challenge this and is obliged in terms of trade deals to accept the imports. Local industry players contend that a well-resourced Department of Agriculture, Forestry and Fisheries could challenge the self-declarations and insist on phytosanitary inspections of the poultry facilities. Similarly, a well-resourced department would be better able to challenge phytosanitary barriers that are put up against SA’s exports.

Country Bird CEO Marthinus Stander said technical phytosanitary barriers were preventing South Africans from exporting to Europe. "At present imports account for about 7% of EU poultry consumption, in SA the figure is 26%," he said. The difference is largely attributable to the EU being able to enforce its phytosanitary standards.

The importance of the Department of Agriculture, Forestry and Fisheries role is also evident in the Brazilian tainted meat scandal. The department has to do the necessary testing to ensure tainted meat products do not get into SA. While China has banned all meat imports from Brazil a spokesperson for the department said last week it was only focusing on the firms implicated in the scandal.

Local industry sources said given capacity constraints it was difficult to see how the department would be able to commit to its undertaking to test all containers of meat from Brazil.

In a related development, the Department of Trade and Industry said last Friday it had received a sunset review application from Sapa, RCL Foods and Afgri Poultry, which stated that US poultry imports were being sold at below cost in SA. The department said the applicants had submitted sufficient evidence to initiate a review investigation. This means the current duties on US imports, which were due to be scrapped on April 4, will remain in place.

Industry players believe the only way to ensure equivalence in the global market is to ensure the Department of Agriculture, Forestry and Fisheries is sufficiently well-resourced to do its job effectively.
© BusinessLIVE MMXVII 

Read more about: sa economy | poultry | industry

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