Who is looking after the interests of the South African consumer around “Poultry”?
The Association of Meat Importers and Exporters (AMIE) was established 25 years ago to facilitate fair trade between its members and government. In that pursuit AMIE only works with the facts, and not according to media or lobbyists’ interpretation of the facts. As an association we believe in the importance of ensuring fair trade and carrying the South Africa consumers best interests at heart by advocating for affordable food protein and safeguarding food security.
Higher inflation is likely to be the reality for South African consumers, persisting longer than some have initially thought or hoped. The South African Reserve Bank itself only expects to reach the mid-point of its inflation target band – 4.5% – in 2025. Along with this burden, supply-side constraints, and shortcomings from the government policy side, most clearly continuous loadshedding and logistics breakdowns, will continue adding higher costs on top of everyday business operations. As I mentioned in my last article around food security, South Africa’s food security won’t be through a lack of food supply, but rather through a lack of affordability.
Local chicken producers are bearing the brunt of myriad government shortcomings and failures, with the ongoing electricity crisis and transport issues at the very top of a list that seems to be growing by the day. However, all South African food producers are in the same boat. The most crucial question that must be asked is, were local chicken producers slow to plan for and adapt to the inevitable electricity shortfalls. Has this caused the issues at the poultry abattoirs?
I do mention and talk about the negativity around ‘protection’ enjoyed by the local South African poultry producers. Lobbyists talk about the number of poultry imports into South Africa, skewing the numbers by adding in Mechanically Deboned Meat (MDM) into their figures. MDM is an important ingredient needed in the manufacturing of processed meat products, and MDM is a product that is not sufficiently produced in South-Africa.
When looking at the actual trade figures, such as chicken bone-in portions which carries a 62% general tariff applied in March 2020, South Africa has since 2020 seen a reduction in chicken bone-in imports of 72 197mt (-44%) compared to 2022. This has allowed the local producers to increase their prices. The average prices of South African frozen and fresh chicken increased by 4.5% and 2.6% week/week to R35.55/kg and R34.94/kg, respectively. The average price of IQF increased by 1.3% week/week to R32.34/kg. Overall, chicken prices are up by 12% year/year.
These cost-increasing factors are inevitably passed onto consumers. In this context of global headwinds, exacerbated by government shortcomings, the first principle should be: Do no harm. In this regard, pausing or even removing some tariffs on imports can be the best tool government has to alleviate at least some pressure from the shoulders of long-suffering consumers.
Reading the latest May household food index report compiled by the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD) the cost of the foods prioritised and bought first in the Household Food Basket is important. The core foods are bought first, and these foods ensure that families do not go hungry whilst ensuring that meals can be cooked. When the prices of core foods increase, there is less money to secure other important mostly nutritionally-rich foods, which are essential for health and well-being and strong immune systems (viz. meat, eggs and dairy which are critical for protein, iron and calcium; vegetables and fruit which are critical for vitamins, minerals and fibre; and finally Maas, peanut butter and pilchards, good fats, protein and calcium essential for children. The data show that the core foods contribute 55% of the total cost of the Household Food Basket. At an average cost of R2 763,36 in May 2023, these foods are relatively very expensive in relation to the total money available in the household purse to secure food. These foods must be bought regardless of price escalations. The high cost of core staple foods results in a lot of proper nutritious food being removed from families’ plates.
Given the many challenges faced by businesses and most importantly consumers, the opportunity is there for government to show acknowledgment of the harsh reality and act with transparency and predictability whenever and wherever it engages with industry.
Protection, through the form of tariffs and/or subsidies, some industries and businesses will always come at the cost of others and, when it comes to matters of economic efficiency and innovation, as well as cost-effectiveness, at the cost of the low-to-middle-income consumer. For as long as the deep impediments to economic activity and job creation remain in place, and real pro-growth reform has not yet materialised, the burden of proof lies on those who would want the government to impose yet more costs on consumers.
Association of Meat Importers and Exporters