Increased competition from cheap US-produced chickens and “economic racism” have forced the country’s biggest black poultry farmer to cut production by as much as 30%.
This, according to Kholofelo Maponya, the chief executive of Daybreak Farms, who this week attributed the cut in his production and staff to the “economic racism” he faced in the retail market, which he said was ill-informed by an economy that continued to distrust black entrepreneurs.
“Black entrepreneurs do not have access to markets because we do not have supply routes and channels. As consumers and executives, we are not conscious about buying black or local,” he said.
“When a retailer empowers or buys from a black company they make sure that company does not have a brand or cannot be identified, so if they give you access, they do so in a no-name brand. They will tell you that they are buying from some black guy, but you cannot see the product at the store.”
The cuts also came a few weeks after the first batch of US poultry landed in South Africa as part of the 65 000 tons in annual quota that the US could export to the country (to ensure that South Africa could continue to receive trade benefits under the African Growth and Opportunity Act), he added.
Maponya backs the SA Poultry Association’s application to the International Trade Administration Commission (Itac) to impose an agricultural safeguard on various EU chicken products that can enter the domestic market duty-free to protect local producers.
The poultry association’s application has been rejected by the Association of Meat Importers and Exporters as a move that would threaten importers as well as the existing terms of the 2004 Trade, Development and Cooperation Agreement between South Africa and the EU allowing duty-free chicken imports.
Maponya believed that government could help local chicken producers, in particular black farmers, by rigorously implementing the Preferential Procurement Policy Framework Act through not only procuring goods from BEE companies but also those produced locally by black business.
“This is very important as it will go a long way towards eradicating the practice of procuring unhygienic or substandard products. It is the only tool that we have as black people for someone to buy from us,” he said.
“We have a R4 trillion economy, of which government makes up R1 trillion and the framework is not imposed. We need to impose this framework throughout the private sector, because government procurement only accounts for a quarter. Let us not pay lip service to this tool that can help black business.”
He said Daybreak’s woes were worsened by perceptions that black products were substandard. “The market looks at a black entrepreneur as a disabled person. If you don’t come with a branded white company as your adviser or some industry expert, you are not listened to. It is done even by black people. Black executives see black people as risky or not economically viable. If a white man makes radical changes in a business, he is a visionary; if a black man does it, he is a careless businessman with no experience,” said Maponya.
He said the radical changes needed to support black business were not being felt on the ground. Instead, in the past 20 years, black empowerment of all sectors has lagged behind, leaving the rest of the market to thrive while black enterprises shut their doors.
“We need to have follow through with regard to supporting small and medium-sized black business,” said Maponya, adding that the issue was about the empowerment of black business in the face of historical and structural impediments.
He believed imported poultry should only be destined for certain parts of the South African market and not “key” sectors of the economy.
Over R2 billion worth of 165 000 tons of EU chicken was sold locally in 2015 alone, said the meat importers and exporters’ association.
David Wolpert, its chief executive, said they were opposed to the poultry association’s Itac application on EU chicken because imports were keeping poultry prices low.
“If a safeguard were to be imposed, hard-pressed consumers would be hit with chicken price increases of up to 30% because of low competition,” said Wolpert.
Kevin Lovell, the poultry association’s chief executive, said cheap imports were a threat to the local industry and the application to impose duties was being done to protect the local industry.