Country Bird, RCL react to South African poultry crisis

Imports of chicken from the European Union are being blamed for the impending closure of one of the processing facilities belonging to Country Bird Holdings of South Africa.

(Yurii Bukhanovskyi | Bigstock)
(Yurii Bukhanovskyi | Bigstock)

Imports of chicken from the European Union are being blamed for the impending closure of one of the processing facilities belonging to Country Bird Holdings of South Africa.

Country Bird is South Africa’s third largest chicken company, according to Business Live, and currently it has three poultry slaughterhouses. The facility at Mahikeng has been earmarked for closure. Employees at the plant were informed last year about this eventuality.

Country Bird’s CEO, Marthinus Stander, said that the government has not increased protection against European imports, despite lobbying from the producers and unions, which allege that the imported legs, thighs and wings are being sold to South Africa at less than the cost of production.

Even the imposition in December last year of a 13.9 percent duty on bone-in chicken imported from Europe was not enough to protect the South African poultry sector, according to the South African Poultry Association (Sapa).

Previously, Business Live reported that direct or indirect employment for up to 50,000 people could be created if South Africa stopped importing poultry meat.

In addition to increasing imports, the challenges facing the South African poultry sector include a prolonged and serious drought that adversely impacted harvests of feed and food grains, and subsequently pushed up feed prices.

RCL Foods: Poultry industry issues decimated profits

These significant difficulties in the South African poultry industry are also affecting RCL Foods   – which includes Rainbow Chicken.

It reported an 8.4 percent increase in Earnings before interest, tax, depreciation and amortization (EBITDA) for the half-year to December 31, excluding poultry. However, overall EBITDA for the period declined by 21.9 per cent when the poultry division results are included.

“The group’s result was adversely impacted by the performance in the chicken business unit with the widely-reported poultry industry issues having decimated profits,” according to the half-year report.

As a result of the crisis in the national chicken industry “due to the oversupply in the local market driven by dumping and a resulting inability to recover cost pressure,” the firm’s chicken business unit delivered a loss of ZAR37.8 million (US$2.83 million) for the period.

RCL Foods has announced it is tackling this challenging situation by shifting production away from low margin Individually Quick Frozen (IQF) mixed portions and towards more value-added products, and reducing its facility in Hammarsdale to a single shift.

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