RCL Foods, owner of Rainbow Chicken, South Africa’s second-largest poultry producer, has announced that R620 million will be invested to bring its Hammarsdale production plant back to full capacity.
The Hammarsdale plant, west of Durban, was a victim of chicken dumping, mainly by the European Union. In 2017, when RCL halved production at the plant and retrenched some 1 200 workers, the EU was dispatching huge volumes of dumped chicken portions to South Africa.
Now, EU imports have been reduced to almost zero because of bird flu outbreaks. Import volumes have dropped, and most bone-in portions such as leg quarters come from the United States and Brazil.
After years of losses, Rainbow has a new chief executive in Marthinus Stander and it is implementing a turnaround plan.
The RCL investment will restore the second shift closed in 2017 and create jobs in the region, the company said in a statement at the fifth South African Investment Conference earlier this month. The statement was reported by Just Food.
“The R620m comprises a combination of RCL Foods’ own investment into its Hammarsdale Rainbow Chicken Processing Plant and Hatchery, and third-party investment by contract growers to increase the supply of chicken to our facility,” RCL said.
“The overall objective is to return the plant back to full capacity, increasing output by 60% over a one-year timeframe. This will increase local chicken supply and drive economies of scale while providing much-needed additional employment.
“The Hammarsdale Rainbow Chicken Processing Plant and Hatchery supplies mostly KwaZulu-Natal across all channels. This expansion is expected to create jobs as we will be reinstating the second shift at the Hammarsdale processing facility,” RCL stated.
In terms of the 2019 poultry master plan, the South African poultry industry committed to investing R1.5 billion in expanded production. It has already met that target and has said that additional investments would be announced.
The master plan envisaged that increased production would supply increased domestic demand and a significantly expanded export drive. This would be supported by a crackdown on dumped and illegal imports. While new production capacity has happened, implementation of the other elements is way behind schedule, and the government has delayed the implementation of new anti-dumping duties on imports from Brazil and four EU countries
Ghana’s poultry industry needs rescuing – again
Ghana’s poultry industry has long been an example of what can go wrong when dumped chicken imports flood the country, particularly from the European Union because of duty-free trade agreements with the EU.
FairPlay has repeatedly reminded people that in 2016 the Ghanain industry had collapsed because imports had taken 95% of the market. The country’s then prime minister told the United Nations that the resultant job losses were one of the reasons that Ghanaian migrants were heading to Europe.
Reviving the industry after the imports devastation has been an expensive business. Initially it involved a five-year programme by the US Department of Agriculture, and the government’s Broiler Revitalisation Programme, supported by an $87 million loan from the country’s Agricultural Development Bank. Now Poultry World reports that the Ghanaian government has committed a “massive investment” of a further $541 million to improve the industry – dumped imports have continued and the local industry says it is once again near to collapse
The journal quoted the chief director of the country’s Ministry of Food and Agriculture, Robert Ankobia, as saying the investment would bring the country a step closer to achieving self-sufficiency in poultry meat products.
The Ghana National Poultry Farmers Association said that, while the country’s poultry sector was on the verge of collapse, Ghana imported nearly 600 000 tonnes of frozen chicken valued at $600 million every year.
The latest Ghana government investment aims to expand domestic production from the current 50 000 tonnes per year to an envisaged 450 000 tonnes, and to increase the value of Ghana’s poultry sector from the existing $62 million to $562 million, according to Ankobia. Let’s hope that this time it works.
Who is monitoring chicken imports?
Two small items in the latest South African import statistics raise much bigger concerns. Chicken products that should not be accepted are being landed in the country.
Both questionable items concern mechanically deboned meat (MDM), a paste used in the production of processed meats, such as polony.
In February this year, the Netherlands landed 40 tonnes of mechanically deboned meat (MDM) in South Africa, in apparent contravention of a poultry imports ban which affects all raw chicken meat.
This follows the import of 229 tonnes of frozen MDM from the European Union in January – 202 tonnes from the Netherlands and 28 tonnes from Denmark.
Because of bird flu bans these countries may not export raw product to South Africa.
Also in February, South Africa imported 51 tonnes of frozen MDM from the United States. These US imports happen regularly, in an apparent contravention of import regulations which state that only “anatomically recognisable cuts” may be imported from the US, and then only from safe geographic compartments. MDM in not an anatomically recognisable cut, it is a paste. Volumes are small, but the principle is important. Why are these consignments not checked at the port of entry, and stopped if they are illegal?
El Niño might not be so bad, says Wandile Sihlobo
Amid dire warnings of a possible agricultural disaster in Southern Africa, with hot and dry conditions starting later this year, one respected agricultural economist says things might not be that bad.
The weather change will be caused by the return of the El Niño phenomenon, ending three seasons of above-average rainfall and ushering in the possibility of record temperatures and drought.
The Agricultural Business Chamber said last month that the El Niño weather effects could pose a threat to South Africa’s food security.
However, the chamber’s chief economist, Wandile Sihlobo, now has better news, at least in the short term.
In a lengthy tweet, Sihlobo said the weather phenomenon, monitored by the International Research Institute for Climate and Society at Columbia University, would bring below-normal rainfall and hotter temperatures in South Africa.
“If it is intense, this could resemble the bleak agricultural conditions we witnessed during the last El Niño drought in the 2015/16 season,” he said. This resulted in severe losses in maize and other field crops, fruits, vegetables and livestock.
“But I doubt things will be this bad. So far, all indications indicate a weak El Niño and the soil moisture remains reasonably favourable across South Africa.
“Thus, I remain optimistic that the 2023/24 agricultural season in South Africa should be okay, although crop yields could drop considerably from the levels of the past few years,” Sihlobo said.
“If my view is correct, we shouldn’t have a notable uptick in consumer food price inflation in 2024; if anything, we should see a softer pace than the expected 2023 levels,” he concluded.
One commentator has already tweeted that it’s too early to conclude a strong El Niño is unlikely – the El Niño indicators will only be in full swing from September onwards. It’s a development that will be watched very closely because El Niño can have a huge effect not only on agriculture but on the whole South African economy.
Bird flu vaccines becoming more popular
Bird flu vaccines are slowly becoming a reality as the global poultry industry tries to find an alternative to the mass cullings that have been used to prevent the spread of the disease.
The huge numbers of cullings in the latest outbreak (58 million in the United States and 50 million in the European Union) have hastened the drive to make vaccines effective and acceptable. There has been resistance to vaccines, primarily due to fears that vaccination could mask infections, and result in trade bans.
Governments are likely to support an effective vaccine because, with notable exceptions such as South Africa, they have been paying increasing sums in compensation as poultry culls have escalated in the world’s worst bird flu outbreak.
Now France has taken the plunge. Poultry World reports that France, one of the countries worst affected by bird flu outbreaks, plans a vaccination programme later this year if final trial results are positive. It has issued a tender for 80 million doses of bird flu vaccines and is the first EU country to take this step.
“France has mandated 2 companies, France’s Ceva Animal Health and Germany’s Boehringher Ingelheim, to develop the avian influenza vaccines,” Poultry World reports.
“Both vaccines have been found to be effective in protecting birds against the virus itself and – more importantly – also prevented birds from shedding the virus.”
Vaccine trials are continuing in other EU countries, and the United States has begun testing bird flu vaccines.
The US trials are the first step in a lengthy process toward the possible first use of vaccines to protect US poultry from the lethal virus. According to the US Department of Agriculture, it could take up to two years before a vaccine is commercially available. The South African poultry industry is watching international developments closely but has not yet decided to approach the government about a change in policy.
US delays cost citrus growers dearly
Here’s yet another example of bureaucratic delays hindering agricultural exports.
The issue has been highlighted by trade adviser Donald MacKay, who has estimated that South Africa loses billions of rand due to delayed tariff decisions.
The citrus industry is providing a potent example. According to a report in Freight News, South Africa’s citrus industry believes exports could grow by 10 million cartons a year for the next decade.
That’s good news for an industry that is struggling at the moment, with many producers losing money because of rising input costs and the impact of daily power cuts.
Justin Chadwick, CEO of the Citrus Growers Association, said red tape is preventing some key markets from importing increased volumes of South African citrus.
The United States, for example, could import an additional 75 000 tons of grapefruit and soft citrus by 2024, which would create another 3 750 jobs in the industry and generate more than R1 billion in export earnings.
“However, currently only growers in the Western and Northern Cape are permitted to export citrus to the region. Growers in other provinces will only be given access to the US market if a long-delayed final rule is finalised between our two governments – a process which has already dragged on for the past six years.” That’s six seasons of lost exports, lost income and lost jobs.
