The latest European Union-funded study on the South African chicken industry makes all the right claims to please the EU, but it will neither help to solve the industry’s problems nor create more jobs in South Africa. Far from it. The predatory chicken trade practices from the EU and Brazil are creating unemployment among poor people in South Africa and then blaming them for their plight.
Exports are not the problem
Like the EU has pretended for some time, their study purports to focus on the export potential of the South African chicken industry and the many problems associated with that, but pays little attention to the damage done as a result of an ever-increasing flood of predatory imports, in which the EU and Brazil have played starring roles.
The challenge facing the local industry is not exports – it is creating the conditions in which local production can expand to claw back some of the 27% of the local market grabbed by predatory and unfair chicken imports at the cost of thousands of South African jobs, in an economy where unemployment and poverty are massive problems.
Exports can be an important addition, but only once the industry has been stabilised and is growing again after more than a decade of relentless assault from predatory imports. Unfair trade practices have increasingly destroyed local jobs in a strategic South African agri industry that underpins the country’s food security.
Impact of chicken imports is massive
The study acknowledges the huge increase in chicken imports, from 200 000 tons in 2001 to the present 550 000 tons, and also the fact that it doubled in the five short years between 2010 and 2015. Despite this, the EU’s economists pretend to be baffled by the fact that local production has hardly increased over this period, and that most of the increase in demand has been taken by imports.
Various tariff applications currently and previously by the industry have outlined that investment in new production and new jobs has been inhibited by the huge volume of imports unfairly grabbing market share. The industry, both the large producers such as Astral and the small-scale entrepreneurs such as hatchery owner Clive Tigere from Limpopo, sit on spare development capacity which they can’t risk investing in because of imports crowding them out of the market.
The local industry says it would be able to meet all of the local demand currently taken by imports, and create extra jobs in the process. But the dumping would have to stop first to ensure they have a market for the extra chicken they will be producing. Meanwhile, we have the worst of all worlds – decreasing food security and food safety, declining chicken industry jobs and no price benefit to consumers. Instead importers are making fat profits off the unwanted chicken leftovers from the EU and Brazil.
EU should help to revive the industry
The study notes that two major producers – RCL Foods and Sovereign – have both diversified their production away from lines that compete with imports, and that RCL has reduced chicken production by more than a million birds a week. It notes that imports may expand to take 38% of the local market by 2027. But it still sees nothing wrong with imports. This despite the fact that the EU keeps imports into their own territories to around 7%, allows imports from only 13 countries and none from the 72 low-income countries that belong to Europe’s Economic Partnership bloc. South Africa is not the only country being kept out of the EU.
If the EU really wants to help the South African chicken industry and its thousands of workers, it should take steps to halt the attack on those jobs by predatory EU producers. It would help to revive the industry and encourage it to grow its local production and then expand into export markets such as the EU.
What would be really helpful is if the EU began by acknowledging how much damage it has done and robustly ensuring that it is meeting its legal obligation to ensure policy coherence for development. Up to now it’s been in denial. And maybe nothing illustrates this denial and refusal to take responsibility better than this study itself.
South Africa, indeed all of Africa, needs a thorough and independent study on the unemployment created in the continent by decades of EU crocodile trade. That is the starting point for determining restitution and then the role the EU should play in African markets, including South Africa. Until then, spare us the EU’s crocodile tears about exports. – Press release, FairPlay