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By Vukosi Maluleke

Digital Journalist

‘Never asked for bailouts’: Sapa responds to Competition Commission

Sapa has reservations over the Competition Commission's draft Terms of Reference (ToRs).

The South African Poultry Association (Sapa) has its feathers ruffled by the Competition Commission’s recent statements.

The Commission recently announced it would launch an inquiry into the poultry industry value chain, calling for public submission on its draft Terms of Reference (ToRs).

In a recent statement, the Commission said it had reason to believe there were features in the poultry market which could impede, distort or restrict competition.

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‘Hostile and disturbing’

Sapa said on Monday that while it would fully co-operate with the Poultry Market Inquiry, it was concerned about certain statements made in the Commission’s draft ToRs.

“We are surprised that the inquiry is considered necessary and concerned at some of the statements and assumptions in the Commission’s announcement,” Sapa said in a statment.

Most notably, the Commission’s suggestion that there were ongoing demands for bailouts in the broiler industry through “ever-increasing tariffs and the imposition of anti-dumping duties”.

“As ITAC (International Trade Adminisration of SA) and the DTIC (Department of Trade, Industry and Competition) will know well, the poultry industry has never in its history asked for ‘bailouts’.

“The use of this term indicates a hostility that we find disturbing,” Sapa said.

According to Sapa, the industry only asked for protection against unfair and dumped imports – not “bailouts”.

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The threat of imports

Meanwhile, the relatively lower price of imported chicken remains a sore point for the industry, making the market difficult for local farmers.

“The industry notes that our biggest competitor is imports, and we are competing with companies in the United States that slaughter more than 45 million birds per week, compared to the 21.5 million per week produced in South Africa,” Sapa said.

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Kindly take note

Sapa said any inquiry into the poultry industry should consider multiple factors:

  • Russia-Ukraine War: Increased production costs due to the rise in feed costs;
  • Money spent by producers to mitigate water shortages and power cuts.
  • Poor logistics infrastructure.

“Additional stress on profitability is likely to be done by the government’s introduction of rebates on poultry import tariffs. This will bring in unneeded additional imports when the local chicken market is in oversupply,” said Sapa.

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‘Competitive producers’

The Commission’s concern over industry practices potentially posing threat to competition have also drawn Sapa’s attention.

“Our producers are among the most competitive in the world – year after year, research by Wageningen University in the Netherlands has found that our producers are among the most competitive in the world, producing a chicken cheaper than all European Union countries, similar to the United States and outperformed only by Brazil,” Sapa said.

Meanwhile, the public have until 8 March at 4pm to make submissions on the Commission’s draft ToRs.

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