WINDHOEK – Namibian consumers fond of succulent baby chickens must brace themselves for a rather hefty increase of 12.5 percent in the price of locally produced chickens in October.
Justifying the increase the managing director of Namib Mills, Ian Collard, said it is impossible for Namibia Poultry Industries (NPI) to produce poultry at current price structures.
“The main reason is that with the current pricing, broiler production in Namibia and also South Africa is not economically viable. We can maybe argue that we also went through a series of input cost increases in electricity, water and fuel but these are not the main reasons. In short, chickens/broilers are too cheap (currently) to facilitate local production,” he stressed.
He said both the Namibian and South African poultry industries have come under pressure over the last few months because of cheaper imports from Brazil and more recently from Europe.
“If the International Trade Advisory Committee’s ruling is in favour of the South African Poultry Association, then the prices of overseas imports into South Africa and also Namibia will increase, allowing local prices to reach more sustainable levels. The same levies apply for the imports outside of SACU member states. Taking the above into account, then the current prices in Botswana, Zambia, Mozambique and Mauritius are more in line with what we envisage as the trend line prices for the future. These countries have protection for their local poultry industries. As this may seem a blow to the consumer, taking the price increases into account the past months, the longer-term benefits will outweigh it,” he reassured Namibian consumers.
He said in the past few months, news focussed on the huge NPI investment of N$600 million, done under the SACU ruling regarding infant industry protection (IIP). IIP for the industry was already obtained in 2001, but it took some time for the investor to muster enough capital and courage to start with the investment. The approvals for the capital expenditure were obtained sometime around 2010, along with financing. Unfortunately by the time that commissioning of the investment took place in May 2012, IIP did not come into force as quickly as expected. Fortunately government gave protection under a managed quota system, with effect from May 6 2013.
During this period, chicken prices hit an all-time low in South Africa and Namibia due to imports of chicken from Brazil, and lately the EU, especially leg quarters.
The surplus therefore created by cheap imports to South Africa had a bump-on effect in Namibia. At that stage 1.5kg IQF Chicken retailed at N$24.99 in Namibia. This created tremendous strain on the poultry industry of South Africa, and the newly commissioned investment in Namibia.
“This protection is industry specific and not company specific. These arrangements were specifically created by the Namibian government to alleviate the local manufacturing industry as per Vision 2030 and NDP4,” he said.
The programme is called import substitution in order to create sustainable local industries and therefore grow the economy and create jobs. Today Namibia is self-sufficient regarding pasta, prices are lower or on par with South Africa and the per capita consumption has more than doubled the past 10 years.
“I think the retailers, consumers, employees and Namibian Government should give NPI a fair chance to start doing good business and slowly but surely unlock good value for the local economy. We are looking forward to creating a healthy sustainable poultry industry,” he said.
By Deon Schlechter