Regional expansion of poultry companies intensifies trade policy debates in Namibia
12 May 2013
According to press reports in March 2013, the Namibian Cabinet “is in the process of finalising negotiations to grant Infant Industry Protection (IIP) to the Namibian poultry industry”. Local multiple-retailers have told local producer Namibia Poultry Industries (NPI) to match the price of imported chicken or take their products elsewhere, but it is reported that local producers are unable to match the prices of imported products.
While the bulk of imports come from South Africa, press reports make reference to imports of “low-cost, and allegedly low-quality, poultry products from Brazil”.
The Managing Director of NPI claims that the company is “losing millions at the moment” (an estimated N$6 million, or €504,300, per month) and is sorely in need of protection. He maintains that protection is needed in the short term while the local brand becomes established, staff are trained, and efficiency gains are made.
In Europe, data submitted on 26 March 2013 to the EU Advisory Group on Poultry and Eggs showed that in 2012 EU poultry meat exports to South Africa increased by 40% over 2011 levels, compared to an overall increase of only 1.3% in total EU poultry meat exports. (The increase in exports to other leading African recipients was 14.2% to Benin, 10.6% to Ghana and 0.07% to the DRC). By 2012, these four main African destinations were taking 26.2% of EU poultry meat exports (374,780 tonnes) compared to only 14% in 2009 (142,447 tonnes).
By the end of 2012, EU poultry meat exports to South Africa were almost 6 times larger than in 2010, accounting for 9.2% of total EU poultry meat exports in 2012, up from 0.8% in 2009.
EU poultry meat exports to selected African destinations in 2009–12 (tonnes)
| 2009 | 2010 | 2011 | 2012 | |
| Benin | 84,912 | 115,066 | 126,212 | 139,559 |
| South Africa | 7,938 | 22,006 | 94,076 | 131,970 |
| Ghana | 28,694 | 41,066 | 68,979 | 69,025 |
| DRC | 20,903 | 27,749 | 29,972 | 34,226 |
| Sub-total | 142,447 | 205,887 | 319,239 | 374,780 |
| Total EU world exports | 1,015,784 | 1,354,610 | 1,412,110 | 1,430,658 |
Source: ‘Export of poultrymeat to selected destinations’, p. 22 of PowerPoint presentation, EC, 26 March 2013
Noting the potential for rapid growth in consumer demand for poultry meat across the Southern African region, other press sources have reported that the South Africa poultry company Rainbow Chicken has raised R3.9 billion (approx. €327.5m) to finance its strategic growth. It has bought a 64.2% share in Foodcorp, the third largest food company in South Africa, and a 49% stake in Zam Chick, from the parent company Zambeef. This acquisition, with its eight Zamchick Inn outlets, broiler houses, chicken abattoir and processing plant, is in line with both Rainbow Chicken’s aspirations to develop “its own retail value-added brands” and “quick-service restaurants” and also the growth aspirations of Zam Chick. Zambeef announced that it will help Rainbow Chicken to access its own existing retail outlets and to target new customers, including in Kenya and Nigeria.
This follows a very downbeat analysis from Rabobank of the prospects for the South African poultry sector, in contrast to the overall global prospects for the industry.
Editorial comment
In 2012, imports of poultry meat from the EU were equivalent to 9.5% of South African poultry production and around eight times the volume of Namibia’s annual poultry consumption. Significantly, while infant industry protection is being sought for the Namibian poultry sector, the question arises as to how this sits with the provisions of the draft EU–SADC EPA agreement and the EU–South Africa Trade, Development and Cooperation Agreement (TDCA). The South African Poultry Association has suggested that, in view of commitments made in trade agreements with the EU, measures other than tariff increases will be needed to deal with the increased volumes of poultry meat imports from the EU (see Agritrade article ‘ South African poultry sector problems compounded by rising EU exports’, 15 April 2013).
Increasing competition on the South African market, along with projected consumption growth in the region, may well account for the corporate expansion of South African poultry companies into Southern Africa. This may see the consequences of expanded EU poultry exports to South Africa rippling across the region, as South African companies enter local markets and intensify competition for local producers. This could greatly complicate efforts to develop regional trade agreements covering trade in poultry meat, as highlighted by the current efforts to secure infant industry protection under the SACU agreement for the poultry sector in Namibia.
