Govt reviews poultry industry protection

16 September 2019 | Agriculture

A public consultation on the statutory protection of the broiler chicken industry was held in Windhoek on Friday, driven by the ministry of trade.

The ministry decided to review the industry's protection measures, which have been in place since 2013, due to the “changes in the global, regional and national economic landscape”.

According to Robert McGregor of Cirrus Capital, roughly N$750 million has been invested in the poultry industry in the past six to seven years and for each N$1 million, a new, sustainable job was created. The industry is driven by Namib Poultry Industries, which makes a direct contribution of 0.12% to the gross domestic product.

McGregor, who did a comprehensive study on the industry in 2018, believes that broilers are critical to the Namibian economy because for each N$1 invested, the economy sees a multiplier effect of 4.42, driving income up to N$4.42. Thus, indirectly, the broiler industry contributes 0.72% to the GDP.

Broiler production is important for Namibia because it provides blue-collar jobs and also gives the consumer a relatively cheap source of protein. With a local industry, Namibia is able to be “a price maker and not a price taker”.

Thus, he noted, protection for the local industry is very important for its continued development and growth, along with policy surety and industry safety.

McGregor added that Namibia's production costs far exceed that of South Africa and noted that the illegal importation of chicken into the country, estimated to be roughly 5 000 tonnes last year, is a major challenge to local growth.

SMEs struggle

SME owners and members of the Namibia Emerging Poultry Farmers' Association alike said that policy uncertainty and access to markets are crippling growth in the industry.

Economists agree. The South African Poultry Association's High Court case, where they are fighting to have import restrictions set aside, has severely limited investment in the sector. The matter has been dragging on for five years, since 2014.

Paulo Shipoke, owner of Oyeno Poultry Industry (OPI) at Ohangwena, which produces roughly 30 000 broilers monthly following a N$14 million investment, says the system of quotas does not benefit SMEs at all.

According to Shipoke, there is a lack of implementation of the system, weak controls at the border and very little support for small retailers which prefer cheap, imported chicken to sell.

“We are consistently under pressure to compete with imports. Studies have shown that we can provide jobs for up to 10 000 people should imports be limited and local production boosted.”

Shipoke's view is that import restrictions must be maintained at all costs.

A case for imports

The Association of Meat Importers and Exporters (Amie), and Namibian importers, say they have contributed N$850 million in infrastructure in the country while they have created 2 400 jobs and contributed N$150 million to the GDP.

Petrus Shipala, from Amie, told the attendees that they spend N$250 million per year on salaries.

Roughly N$474 million leaves the economy every year just for chicken imports. Millions more are spent on pork and milk products.

The importers are of the view that a lack of competition in the broiler market will lead to a monopoly and a price increase. They say that some chicken cuts are between 33 and 66% more expensive locally than in South Africa.

This however, is questionable as recent market surveys performed by NPI have shown that local prices are comparable to those of South Africa.

Amie is also of the view that consumers are compromised in Namibia as the brine content is up to 25% while in South Africa, only 15% of brine is permitted.

Amie proposed that quotas for chicken imports be increased and that these are reviewed quarterly.

The consumer

Milton Shaanika-Louw of the Namibian Consumer Protection Group said for consumers it is not only about price but also about buying a good quality product and contributing to the country's economy.

“When someone speaks to me about consumers and prices, I always speak of a large family. The fewer job opportunities we have in Namibia, the more chicken I have to buy for this family. It is irrelevant how cheap chicken is, I will always have to buy it.

“Consumers would like to see the Namibian dollar stay in the country for longer,” he said.

Shaanika-Louw suggested that standards be created for chicken and that measures be implemented for the industry in such a way that its protection does not lead to the exploitation of consumers by way of pricing.

He added that imports must be better controlled.

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