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Cheap chicken, sugar imports hit RCL Foods

At least 500 000 tons of both chicken and sugar products entered the SA market, displacing local production, says CEO.

RCL Foods is appealing to the South African government to limit cheap imports of chicken and sugar after an influx from the Americas weighed on the local producer.

South Africa is an easy target, with “pretty porous” borders and generous tariffs, Chief Financial Officer Rob Field said by phone on Monday. The Durban-based company is “a highly efficient producer, so there’s no issue with supplying the local market at the volume that is required and at a price that is internationally competitive,” he said.

RCL Foods, which makes Sunbake bread, Selati sugar and Rainbow chicken, is also striving to recover from the effects of a drought and a deadly listeriosis crisis that eroded trust in its processed meat even though its own plants were not a source of the disease. The issues with chicken and sugar compounded those challenges, sending earnings, excluding some items, down 26% in the six months through December.

“No market can sustain itself when you have dumped imports — and to the extent that they are coming in,” the CFO said. “Chicken and sugar saw 500 000 tons of each of those products coming into our market and displacing local production.”

RCL is in talks with local government to “find a way to level the playing field,” Field added.

RCL has invested in additional safety measures as the company seeks ways to regain consumer trust after the listeriosis outbreak, Field said. The stock, which has dropped 19% in the past year, pared the decline by climbing 7.5% by 12:00 pm in Johannesburg, valuing RCL at R13 billion ($912 million).

© 2019 Bloomberg L.P
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In order to level the playing field RCM should first improve the quality of their chicken. Why should a consumer pay more for local chicken when you can get a top quality chicken quarter imported from Europe (not talking usa imports here..ughhh!!!) without added brine and which at least tastes like…well…chicken. The”dumping” of chicken is normally the portion market and not fresh whole or frozen chicken, so stop crying “fowl” here and step up to the plate with a competitive product without trying to be the monopoly. The fact that you can get cheaper imported chicken shows that there is something seriously wrong with pricing in the local market. The same goes for some companies in the biscuit market. I can buy a superior quality imported (yes with taxes, exchange rate etc) biscuit for maybe a rand or 2 more, sometimes cheaper) than a local inferior ingriedient and tasting product. We live in a globalised world..let us not go back to the dark ages of when the rest of the world was enjoying an immense variety of cheeses and SA only had cheddar and gouda on the shelf to protect local production.

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