No gold at end of the rainbow for SA's beleaguered chicken industry

Amid layoffs and closures, and a call for a total ban on imports, a task team is trying to save South Africa's chicken industry

Last Sunday, Christopher Majola cut a lonely figure, sitting on a manhole pondering his bleak future after losing his job of 34 years at Rainbow Chicken in Hammarsdale, KwaZulu-Natal.

As scores of his frustrated fellow retrenched workers filed past him for a meeting at the Mpumalanga township's main hall, Majola spent his time fiddling with his cellphone.

Two days earlier, the 59-year-old father of six from Cato Ridge, halfway between Durban and Pietermaritzburg, had knocked off for the last time after receiving the devastating news that he had been retrenched.

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Majola was one of 1,200 workers laid off by Rainbow Chicken, which is owned by RCL Foods, in a bid to stay afloat after years of fighting cheap chicken imports from the EU, Brazil and the US.

On Tuesday, more workers also clocked out for the last time at Rainbow - bringing the number of retrenched workers to 1350 at one of South Africa's biggest chicken-producing companies.

RCL Foods consumer division MD Scott Pitman's pledge of R1-million for skills development training for the retrenched workers did not offer much comfort to Majola, who is worried about how he is going to educate his four children who are still at school.

His retrenchment also means that his dream of building a decent home for his family before his retirement has been shattered.

"I have six children and four are still at school. Two have passed matric but are unemployed. I wanted to educate my children to a level that they wanted. I also wanted to build a decent home for my family before retiring, but now I won't be able to do that," lamented Majola.

Pitman offered the retrenched workers some hope, telling them that while it was sad to see the company breaking up instead of growing, he was involved in government efforts to fix the ailing poultry industry.

But there are fears there could be more job losses in the local industry, which has struggled in the face of increasing imports in the past three to five years. Chicken imports have risen sevenfold over a 14-year period, from 63,722 tons in 2001 to 456,794 tons in 2015.

A task team headed by the Department of Trade and Industry has been set up to review the industry, and the chicken crisis was expected to be high on the agenda of a cabinet lekgotla that began on Wednesday.

However, unions warned this week that 40,000 jobs could be lost in the poultry industry if nothing was done about cheap imports.

Urgent and necessary trade policy measures have to be put in place to address the injury to the sector, the industry remains vulnerable and long-term solutions lie in crafting policy

The ANC weighed in on the crisis, with secretary-general Gwede Mantashe telling the media on Monday, after the ANC national executive committee meeting in Pretoria last weekend, that it had resolved that the government should purchase struggling poultry farms.

This was followed by an admission by the DTI during its presentation in parliament on Wednesday that the poultry industry was in a crisis, which it attributed to consumers' preference for "brown meat" such as drumsticks and wings.

Garth Strachan, the department's deputy director-general for industrial development, said the high cost of feed and the drought had also hit the sector.

South African Poultry Association CEO Kevin Lovell said this week that the task team, which includes labour and the industry, was trying to devise a "viable and lawful solution".

He added: "Our problem is dumping. The cheapness of most imports has nothing to do with the cost of production - it is simply dumping."

He said the International Trade Administration Commission of South Africa had found the US, the EU and Brazil guilty of dumping, but instead of anti-dumping duties being instituted against Brazil, the general tariff was increased.

"Until such time as these decisions are successfully challenged in a local court or at the WTO [World Trade Organisation], these countries are dumpers," Lovell said.

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Imports made up about a quarter of local consumption and imports of bone-in portions, " which harm us the most", would be about 240,000 tons, and more than 80% of bone-in portions came from the EU, Lovell said.    

Fifteen of the 25 farms RCL Foods had been forced to sell in Hammarsdale had already been purchased by people who were not farmers and they were unlikely to be available for government purchase, he said.

"But there is a better opportunity for the government. If there was no importation whatsoever, we could create roughly 50,000 direct and indirect local jobs - 5% of our national target - and use this opportunity to conduct major transformation of the industry."

Agriculture Business Chamber (Agbiz) CEO John Purchase said it supported the anti-dumping duties to avert the damage caused by EU poultry imports.

"We believe, however, that these trade instruments are a short-term measure to a long-term problem. Our position is, while urgent and necessary trade policy measures have to be put in place to address the injury to the sector, the industry remains vulnerable and long-term solutions lie in crafting policy which drives the competitiveness of the sector."

The avian flu outbreak in the EU would provide the industry with breathing space, Purchase said.

Only four of the 12 eligible EU countries were affected by South Africa's import ban.

"So the expectation is that we will see a drastic reduction in imports during the course of this ban, and all indications suggest that imports from the EU might be cut by at least half," said Purchase.

In principle, he said, the chamber was also in support of the industrial policy action plan incentives targeting the poultry industry and had been asking for a specialised focus on the poultry industry since mid-2015, when the department was negotiating the African Growth and Opportunity Act poultry deal.

"We do hope that, after all has been said and done, the DTI-co-ordinated task team comes up with frameworks and plans that address issues of cost competitiveness," said Purchase.

mthethwab@sundaytimes.co.za