Defuse the ‘chicken wars’ for sustainable industry growth

By Simnikiwe Hlatshaneni

Brazil’s vision of becoming the world’s bread basket is borne of a tightly integrated master plan, which comprehensively represents the interests of private capital and government’s socio-economic goals.

From the smallest producers to industry leaders and cabinet, the agricultural sector in the home of the earth’s lung speaks one language, walking towards a common destination. Is it a utopia? Not nearly, but it works and translates to jobs, economic growth and, overall, it attracts investment.

Right now SA’s minister of trade and industry, Ebrahim Patel, is in the throes of developing a master plan, not dissimilar in principle to that of its Brics partner from across the Southern Hemisphere.

Industries want pro-business policies that protect competing sects of it. For players in the poultry market, there needs to be a balance between developing the local producers, while developing a complementary role for importers. Patel has recognised local producers can be developed, with government’s backing, into world-class exporters of SA poultry.

The challenges facing Brazil can, at some level, be compared to the challenges facing South Africa. Inequality may be our biggest parallel, but Brazil has managed to bring down its unemployment rate from 13.7% in 2017, to 12% in the second quarter of this year. All of this while going through a six-year economic crisis, albeit incomparable to the train wreck South Africa became in the same period.

In SA, the stakes are higher. The unemployment rate hit 27% this year. Threats of divestment in agriculture as a result of government’s push to expropriate land have soured government’s relations with the sector.

The local producers want market protection, but what this master plan offers is something more sustainable in the long run. Protectionism in France has made agricultural products there more expensive. That is lesson number one.

Lesson number two, is that Brazil’s meat sector has health regulation compliance and quality standards down to a science, making it difficult for export markets to tariff them out of their countries.

But does this mean the SA Poultry Association’s call for a tariff hike for importers is unnecessary? Maybe, but it has highlighed, for the public, the role this market plays in the economy and has helped force government’s hand to actually wake up and help the local industry find itself in the global market, hopefully creating a template for other industries in similar distress.

There is also hope that trade in expertise between Brazilian and South African meat producers can result in strengthened relations and a better economy for South Africa.

Earlier this week, Ricardo Santin, the CEO of the Brazilian Association for Animal Protein (ABPA), Brazil’s meat production and exporting powerhouse, expressed the desire to help SA’s local producers. When you cannot compete with a giant you let them help you become one.

The tariff war in the poultry industry had created an air of enmity between the two entities. He encouraged the local industry to choose partnership over war. But between headlines and clashing interests – which don’t really clash in reality – it remained to be seen what would follow this round in the so-called chicken wars.