The South African Poultry Association (SAPA) stated that the South African poultry industry was in a crisis and an advanced state of distress. The Association attributed the cause of the distress to imports from the European Union. It said collective actions that were taken so far were inadequate. SAPA told the Committee that the only thing that would save the situation was the establishment of a regulatory framework that would support the local industry growth and sustainability, reduce imports by half, and prevent rampant subsidisation and dumping by developing countries.
The Association also revealed that less than 3% of imports were prime products. It reported the United States of America (USA) and European Union (EU) did not eat all the parts of a chicken and the undesired portions, which were seen as waste, were dumped into a few unprotected markets like South Africa. Brazil, which was the exporter of chicken breast meat to the European Union, had a surplus of leg quarters to sell and was forced to dump just like the United States and European Union.
SAPA also noted that for every 10 000 tonnes less meat that the industry produced, the industry was going to shed 1 069 direct and indirect jobs. Some companies were about to shed a few thousand jobs. Last month, Rainbow retrenched 1 350 workers, including managers. Country Bird was going close down their Mahikeng abattoir, and 939 direct and 1605 indirect jobs would be lost without government intervention. Daybreak, the first significant black owned producer, was in major difficulties. Other companies were cutting back on production. More than a dozen companies were lost in the last few years. For exporters to produce for South Africa, SAPA identified best available tools. It suggested there should be an increase in inspection services, strict application of existing standards and regulations equally, an approach similar to that of Minister Gigaba’s enforcement of grading regulations, and establishment of export agency funded by the government.
The Committee also received a briefing from the Department of Agriculture, Forestry and Fisheries (DAFF) on new amendments and insertion of definitions to the National Veld and Forest Fire Amendment Bill. The Committee considered the new amendments and insertions but did not adopt the Bill.
Members, with regard to the Bill, wanted to know what necessitated the name change and asked what informed the suggestion that a traditional leader could enforce the Act. They wanted to establish why in the previous amendments an aggrieved individual could appeal the decision of the Minister but the new amendments did not make provisions for that. Members enquired if there was a provision in the Bill that forced the fire protection officers to be accredited because the Bill made provisions for them to enforce the Act. They wanted to establish if there was a provision that dealt with municipalities or provinces that did not act because in some rural areas these spheres of government did nothing when there was fire.
To SAPA, Members wanted to know what the quality of the imported chicken portions were and enquired if there was any finding of dumping in South Africa. They asked for clarity on why brine level certification at the export abattoir was required. They asked why there should be an increase in the inspection services, and why should whole bird imports be encouraged instead of waste portion imports. Members asked how Brazil managed to stay on top and wanted to know if our products were below standards seeing that the developed world did not eat all the parts of a chicken. They remarked that DAFF had to explain why South Africa was not dumping back and allowing countries who did not want our chicken to dump theirs here in South Africa.
Briefing on National Veld and Forest Fire Amendment Bill
Ms Pumeza Nodada, Chief Director in Forestry Development and Regulations, DAFF, informed the Committee that the Bill was about providing amendments and inserting certain definitions and facilitating the formation of Fire Protection Associations by Municipalities and Traditional Councils. It was also to compel municipalities and other state organs that owned or managed land to join Fire Protection Associations and to amend the title of the Act. The establishment of the Fire Protection Associations promoted the inclusion of women and youth in decision making. She then took the Committee through the proposed new amendments and definitions, page by page:
Section 2 (1) saw the insertion of new terms and definitions: “communal land” and “municipality” in order to align the Act with other relevant legislation, in particular the Local Government Municipal Systems Act of 2000.
Section 2 (1) saw the insertion of new terms and definitions: “fire in the open air”, “public entity”, and “Act”. These terms were clearly to define the different terms in the Act for better enforcement and alignment to other relevant legislation, and to align the title of the Act with the amendments such as the definition of veldfire.
Section 2 (1) comprised new terms and definitions: “traditional council” and “veldfire” in order to clearly define the different terms in the Act for better enforcement and alignment to the other relevant legislation, and to clearly define “veldfire’ to be inclusive of all types of vegetation, including cultivated lands and other biomes.
Section 3 got inserted (d) in sub-section 3 (3). It was reasoned that the Principal Act did not make provisions for Municipalities and Traditional Councils to facilitate the formation of Fire Protection Associations in the area of their jurisdiction. This would provide effect to the roles and responsibilities of Municipalities and Traditional Councils.
Section 4 (8) that dealt with the registration of fire protection associations saw the insertion of terms, “companies” and “Bill”. This was done to strengthen compliance and enforcement measures. Now it was going to read like, “Section 4(8) - The owner in respect of the State land, State owned companies, Public entity or an organ of State must within a year after the commencement of the National Veld and Forest Fire Amendment Bill, 2016 join a registered fire protection association in the area in which the land is situated”.
Section 10 (2) consisted of the insertion of sub-sections (a), (b) and (c). The benefit was that landowners, farmers, and conservation agencies would be able to use fire as a management tool.
In Section 11 (a) that dealt with the delegation of powers, the Principal Act referred to: (1) the South African Weather Bureau (former title of the current service); and (2) was too specific in terms of naming the responsible department. When it was amended, it was going to read like, “Sec.11 – The Minister may delegate any of his or her powers or duties in terms of this Chapter 3 to: (a) the South African Weather Service, established in terms of the South African Weather Service Act, 2001 (Act No. 8 of 2001) if the Director-General of the Department responsible for the administration of the said Act agrees”. Now the correct reference or title of SAWS (South African Weather Service) was used, and DAFF did not have to amend the Act should the functional responsibility of the SAWS be moved to an alternative department or the current department changed name.
Section 26 of the Principal Act did not provide for Traditional Leaders to enforce the Act. The benefit of this amendment was to provide reinforcement of offences and penalties.
Section 32A had a new section inserted. The Principal Act did not provide for appeal. Once it was amended, it was going to read like, “32A (1) - Any affected person may appeal to the Minister against a decision taken by any person or entity under the power delegated in term of this Act. (2) An appeal under subsection (1) must be noted and dealt with in the manner and in accordance with the procedure prescribed by the Minister in the Regulations. (3) The Minister shall consider any matter submitted to him or her on appeal, after giving every person with an interest in the matter an opportunity to state his or her case”. This amendment was done in order to comply with the law.
In her conclusion she indicated that consultations were conducted with stakeholders that include, amongst others, the following:
- Government Departments, SALGA
- Forestry Industry – Forestry South Africa (FSA); Lessees (MTO Pty Ltd, Siyaqhubeka, Amathole Forestry Company and Singisi Forest Products)
- Tourism and Parks Boards / Conservation Agencies e.g. South African National Parks, South African Biodiversity Institute (SANBI)
- NEDLAC (National Economic Development and Labour Council)
- Mining companies
Briefing by SA Poultry Association (SAPA)
Mr Kevin Lovell, Chief Executive Officer, SAPA, enlightened the Committee that the South African Poultry industry was in a crisis and an advanced state of distress. The current cause of the distress was imports from the EU and urgent action was required. Collective actions taken to date were inadequate. He said there was a need to strengthen the regulatory framework in order to support the local industry growth and sustainability, and prevent the rampant subsidisation and dumping by developing countries. The country needed a regulatory framework that required exporters to produce products for South Africa, and not simply dispose of stored waste; and it should ensure that imports were based on national needs, not on the unconstrained greed of the importers. The framework should also support industry investment, growth, and, sustainability, job creation, and food security.
The poultry trade had structural imbalances. Less than 3% of imports were prime products. What was undesired in the exporting country was exported to other countries. The developed world (13% of global population) did not eat all the parts of a chicken, a dietary choice that distorted global markets. Waste was dumped into a few unprotected markets like South Africa. The US did not eat all the parts of the chicken and this was leading to surplus and waste products. Already, it was in an oversupply situation even if they did eat all the parts of a chicken and it was more expensive than Brazil to export in normal course of trade. On the other hand, the EU was a high cost producer, higher than South Africa. Just like the US, they did not eat all the parts of the chicken and this was leading to surplus and waste products. Additionally, it imported breast meat and they were in an oversupply situation even if they did eat all the parts of a chicken and it was too expensive to export in normal course of trade.
The EU, US, and Brazil were structurally imbalanced, but not South Africa. Brazil was the true exporter of whole birds and had the best cost efficiencies. The country exported breast meat to the EU, meaning they had surplus leg quarters to sell and were forced to follow US and EU pricing models, meaning they were forced to dump as a consequence of developed world distortions. South Africa, on the contrary, ate all parts of a chicken. So it was a structurally balanced market. The country paid more for maize and soya beans / oilcake than Brazil, Argentina and the Ukraine, and it was the cheaper producer than the EU. The US and EU were disrespecting the rule of law. Both was found guilty of dumping by the International Trade Administration Commission (ITAC), and the US was found guilty of chicken dumping by China and Mexico. Until a lawful forum overturned the rulings, the EU and US could not claim “allegations” of “dumping”.
Mr Lovell, sharing information with Committee on the effect of imports, noted that for every 10 000 tonnes of less meat that the industry produced, South Africa was going shed 1 069 direct and indirect jobs. Some companies were about to shed a few thousand jobs. Last month, Rainbow retrenched 1 350 workers, including managers. Country Bird was going close down their Mahikeng abattoir, and 939 direct and 1605 indirect jobs would be lost without government intervention. Daybreak, the first significant black owned producer, was in major difficulties. Other companies were cutting back on production. More than a dozen companies were lost in the last few years.
A total number of 26 725 of direct and indirect (including grain) jobs could be created if South Africa did not import any chicken meat (excluding mdm and offal) while 48 853 of direct and indirect (including grain) jobs could be created if South Africa did not import any chicken meat (including mdm and offal) and that was 5% of the national jobs target. He also stated there was an urgent need for improved disease management. The high disease pressure impacted on food security, poverty alleviation, and provision of employment opportunities. The threat of new diseases or outbreaks was through trade. The poultry industry needed to formalize its relationship with DAFF to allow for the optimisation of disease management resources. The poultry industry also formed the Poultry Disease Management Agency as a sign of commitment to fight diseases.
With regard to transformation opportunities, he identified the following key areas:
- Government procurement and retail opportunities
- Debate on contract production needed - a number of producers did not see this as transformational
- Size of farms needs clarity - small farms would always need support but can be good for the country
Mr Lovell informed the Committee there were best tools available that could make exporters produce for South Africa. Amongst other things, he suggested the following:
- To establish measures that would make exporters produce for South Africa. This meant applying existing standards and regulations equally – an approach similar to that of Minister Gigaba.
- Increase inspection services- directly or by assignment
- Enforce grading regulations
- Requirement of brine level certification at export abattoir
- Establishment of export agency funded by the government
He concluded by saying the survival of this industry, food security, the rural economy and 130 000 workers and their families was largely in the hands of government. If government helped the industry to survive, the industry would grow and contribute substantially to the future of our country. There was very little time to act and do the right thing.
Ms A Steyn (DA) wanted to know what the reason was for the name change of the Act.
Ms Nodada explained that what necessitated the name change was that the Principal Act (2005) defined veld fire as a forest or mountain fire. Consultations with COGTA realised that some fires did not happen only in forest and mountains. A decision was then taken to widen the definition of veld fire so that it was not confined to forest fire only.
Mr P Maloyi (ANC) asked what informed the suggestion that a traditional leader could enforce the Act. He further wanted to know why in the previous amendments an aggrieved individual could appeal the decision of the Minister but the new amendments did not make provisions for that.
Ms Nodada, on enforcement of the Act by traditional leaders, said the rationale was for the traditional leadership to assist in the enforcement of the Act because when fires happened in communal areas, it was the leadership of that area that had to take action and account instead of waiting for a government official. The traditional leaders were given the powers so that they could intervene and know what to do and not to do. Regarding appeals by aggrieved individuals, she stated they realised that a person could appeal whatever decision taken. But if the decision was taken by the Minister, then it had to be appealed through the courts.
Ms T Gasebonwe-Tongwane (ANC) wanted to know why non-governmental organisations were not compelled like municipalities and state organs that owned or managed land to join the Fire Protection Associations.
Ms Nodada said the reason was to compel state organs and municipalities to comply with the law.
The Director-General added the idea was to ensure that at local level there was an association that everyone could be involved in. This was going to be broadened to include military veterans and SALGA was consulted on this issue.
The Chairperson commented that structures and associations were being put in place by the government but nothing was coordinated. Municipalities had their own systems which included traditional leaders but they did not seem to work. She said harmony should be created on the ground regarding these structures and associations. The Chairperson wanted to know what the role of the Forest Council was regarding the appeals process and asked if the Bill complied with Section 20.
Ms Nodada, concerning the Forest Council, indicated it was consulted on what DAFF wants to do. The Council was never thought of as an appeals body. But it was given space to pick up issues along the way it feels strongly about and it was free to make submissions, and it did that already. Pertaining to the Bill’s compliance with Section 20, she indicated that consultations were held with COGTA because there were linkages between the laws regulating the fire brigades of municipalities and the Forest Fire Management Act.
Mr N Capa (ANC) enquired if there was a provision in the Bill that forced the fire protection officers to be accredited because the Bill made provisions for them to enforce the Act.
Ms Nodada explained that the intention of the amendment was to ensure they could not enforce without having training. This included making security checks on them and to ensure they were given identity cards to prove they have undergone the required training.
Ms Steyn wanted to establish if there was a provision that dealt with municipalities or provinces that did not act because in some rural areas these spheres of government did nothing when there was fire.
The Director-General said there were farmers’ associations that dealt with fire issues. The farmers’ association had to interact with local associations that dealt with the municipalities. There were areas where farmers took responsibility for fires. Sometimes it was a case of capacity. Local associations should come together and interact with the municipality.
Mr N Paulsen (EFF) asked if an awareness and education campaign was done enough for the public on these fire associations.
The Director-General said the consultation process that was being done was already creating awareness about the associations within the municipalities.
Mr Paulsen wanted to know what the quality of the imported chicken portions was and wanted to know why SAPA could not ensure there were small farmers who hired more people seeing that most chicken producers were closing down.
Mr Lovell, pertaining to the quality of portions, said there were many ways of looking at it. The physical quality showed that the imported product was older than the locally produced, but it was still okay. The way it looked depended on the way it was frozen, especially if it came from the EU. But the one from the US was not good. It also depended on whether it was cut by hand or machine. The microbiological quality of the EU was like that of South Africa. Brazil used residues that were not tested in South Africa. Overall, the imported product was older but still okay and its physical quality depended on the way it was frozen. On smaller farmers hiring more people, he stated “if we want to change the nature of the industry, we need more small farmers”. And this added permanent costs. The abattoirs had to support the farmers, first. Unfortunately, it was not like that in South Africa.
Ms Steyn enquired if there was any finding of dumping in South Africa and asked who was found guilty by whom because it appeared that the US was disrespecting the law regarding poultry trade. She further asked for clarity on why brine level certification at export abattoir was required.
Mr Lovell, with regard to who was found guilty, pointed out that the Netherlands, UK and Germany were the ones found guilty. Brazil was found guilty for dumping boneless breasts while the US was found guilty by Mexico and China for dumping bones in portion. About dumping findings in South Africa, he said there were three reports already regarding that and would be sent to the Committee. An investigation of dumping by Brazil was discovered. He said that Minister Davis suggested there should be an increase in tariff and it was granted in 2013. On the required brine certification, he stated it was not done on imported products. It was a safety measure which had to be done separately. But it was not done in South Africa.
Mr Maloyi wanted to establish if SAPA interacted with relevant departments on the issues it raised and what was the response of these government departments.
Mr Lovell indicated that interaction happened, but there was no success. He pointed out that government did not have the capacity to solve all the problems. Two task teams were appointed and a third one was about to exist to look into these problems. The task teams agreed on certain conditions on what they needed to do. The government would only respond or make interventions when the task teams concluded their work. He noted he was in no position to disclose what was discussed with the task teams. It was confidential information.
Mr Capa asked what forced the reduction of poultry production and wanted to know if SAPA had not made any mistakes in this process.
Mr Lovell, regarding the reduction in poultry production, explained that some companies had not closed down completely but employed people on a temporary basis and were working fewer hours than usual. That is what was happening in the industry. Concerning any wrongdoing by SAPA, he said they did nothing wrong. SAPA was following the trade remedies route.
Mr W Maphanga (ANC) remarked that the state was in a serious predicament when looking at the presentation. There were job losses and industries were closing down. This was not good for the affected families and economy yet the President was calling for the radical transformation of the economy. He asked how Brazil managed to stay on top. Further, he wanted to know if our products were below standards seeing that the developed world did not eat all the parts of a chicken.
Mr Lovell, about radical transformation, indicated that what that meant was that it had to be disruptive more than destructive. It did not mean existing companies had to lose identity. What was important was for small farmers to get their chicken to the abattoirs. In some cases, the chicken from small farmers did get to the abattoirs but were produced under a big brand name. On why Brazil remained on top, he pointed out that farmers receive a lot of support from the government. The needs of farmers were addressed adequately. In SA there was a mismatch in the way the ARC was using its mandate and it remained under-funded. With regard to chicken production standards, he maintained that our production was up to standard. For example, if we want chicken from outside countries, it would be cut and packaged according to our own standards. But unfortunately, some of those foreign countries did not have specific customers. So, that was why nothing was packaged according to the importers’ standards. It got dumped instead.
Mr P van Dalen (DA) asked why there should be an increase in the inspection services and why should whole bird imports be encouraged instead of waste portion imports.
Mr Lovell indicated that the country needed to employ the Minister Gigaba’s approach because there were abattoirs around the world that were allowed to export to South Africa but these abattoirs were never inspected by South Africa. So, it was important to treat them the way they treated us. On whole bird imports, he pointed out it would be useless to bring the whole bird to South Africa because the foreign countries wanted to sell us their own rubbish. South Africa would like to export to the rest of the African continent and Middle East.
Mr Maloyi remarked that if the work of the task teams could not be disclosed to the meeting, that indicated there was a problem and Members had to start taking action. It was important to have relevant departments tackling this problem as a matter of urgency. Members and the Director-General needed the information that was classified in order to make proper interventions.
Ms Steyn supported the idea, saying the Committee needed to have a joint meeting with DAFF, DTI and National Treasury on issues raised in the presentation.
Mr Lovell also welcomed the idea and indicated that the task teams comprised of officials from the DTI, IDC, EDD, SARS, industry, and labour. The Committee had a right to suggest other departments if they wanted those departments to be included in those task teams.
The Chairperson commented that if the US was the biggest consumer of chicken breasts, why South Africa could not export chicken breasts to US if South Africa was part of the global world. South Africa needed to be a rough player by dumping back to them so as to balance the game.
Mr Lovell replied that the US and EU was conveying excuses that they did not have time to come to South Africa to inspect the safety of our produce. The US and EU were not interested in some of our products. South Africa had not yet written letters to the US and EU to express interest to export chicken to those countries. For that to happen, South Africa also had to play a dirty game.
The Chairperson remarked that DAFF had to explain why South Africa was not dumping back and allowing countries who did not want our chicken to dump theirs here in South Africa. Further, DAFF had to explain about the dumping finding in South Africa. All the issues raised in the presentation should be prioritised.
Ms Steyn remarked that the problem lied before the chicken got to the shelf. She suggested that the Committee do an oversight on how chicken got delivered here.
Mr Motale wanted to know how representative SAPA was.
Mr Agmat Brinkhuis, Chairman, SAPA, explained that the organisation consisted of big and small producers. There were more voices than players. There was progress. The focus was on two subsidiaries: broilers and egg production. He further said he was a smallholder farmer in Cape Town and was a member of SAPA for many years, worked on the transformation of SAPA and formed a Board. Though the challenges were big, there was progress taking place.
Mr Capa commented he did not think SAPA communicated the problem to the consumers that the cheapest chicken did not mean it was always the best.
The Chairperson also remarked it was not fair for the consumers to pay for something that did not have a label. The consumer had to know what was inside the packet and where it came from. She noted that sometimes the programme of Parliament was too tight to do an oversight on everything that was happening on the ground.
Mr Lovell said he would support the idea of Food Safety Agency in South Africa in order to avoid food security problems.
Adoption of Minutes
31 January 2017 Minutes
The Chairperson took the Members through the document, page by page.
Ms Steyn moved for the adoption of minutes.
Mr van Dalen supported the move.
The minutes were adopted without amendments.
14 February 2017 Minutes
Mr Mathale moved for the adoption of minutes.
Ms Gasebonwe-Tongwane seconded the move.
The minutes were adopted with amendments.
The meeting was adjourned.