Poultry producer Astral, which first proposed this years ago, says it will support such an initiative if it is reviewed.
- Poultry producer Astral, the first to propose this move years ago, says it will support such an initiative if it is reviewed.
- Other small farmers and political parties are also calling for the zero rate of chicken feed or similar products on the shelves.
- Poultry it is the number one source of essential protein for millions of households in South Africa who cannot afford many other alternatives.
- For more stories, go to News24 Business Cover.
SA’s largest poultry producer, Astral Foods, is calling on the government to remove Value Added Tax (VAT) on chicken products.
The company sounded alarm bells earlier this week by saying it is producing chicken at a loss. His cost of producing a chicken now exceeds the selling price by R2 per kilogram because the burden has not abated and rampant feed costs have pushed his expenses to new heights.
But Astral can’t pass these costs on to consumers, who are already struggling to make ends meet due to rising food prices, interest rates and other living expenses.
Chicken is the number one source of essential protein for millions of households in South Africa who cannot afford many other alternatives.
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In a statement published earlier this week, Astral said it had proposed VAT-exempt chicken in the past. He said that food security in SA is now under threat. The rising cost of the average food basket, which includes poultry as a staple protein, has put many consumers under extreme stress and will continue to do so.
As a result, if this proposal is reviewed, Astral will be among those who support it.
“A couple of years ago, Astral was the first poultry producer to propose that chicken be categorized as a zero VAT rate product, however the government rejected it,” said Astral chief executive Chris Schutte. “If this is reviewed, Astral will once again support such an initiative.”
Productores Avícolas SA (SAPA) have also been calling for the removal of VAT on chicken products. In the latest SAPA Poultry Newsletter published in December, small-scale poultry farmer Ade Camngca of Ruffled Feathers Poultry Farming wrote that most other small- and medium-scale poultry farmers would also support a call for zero feed for birds.
He believes that removing VAT from food, even for a limited period, could help reduce the cost of chicken production and therefore curb losses for poultry producers.
He said other governments around the world offer subsidies to stimulate production of their “favorite staples”, and in South Africa, poultry should be classified as such because it is the most accessible and affordable source of animal protein.
Even political parties have jumped on that bandwagon, with the district attorney saying that bone-in chicken should have a zero VAT rate. On Friday, DA MP Noko Masipa said the fact that the cost of poultry production in SA now exceeds the selling price dictates that farmers must increase their prices. But consumers can’t afford more price increases, especially for staples like chicken.
“In many rural and urban areas, poor citizens are highly dependent on poultry meat and eggs for safe nutritional protein in their daily diets. This poses a great threat to national food security. Therefore, the DA reiterates its call for bone-in chicken to have a zero VAT rate.
“Removing VAT on bone-in chicken would benefit the bottom 50% of South Africans,” he said.
