N$600m poultry project in trouble
The Namibia Poultry Industries’ N$600 million investment is in jeopardy if no protection is given to the project against cheap imports, a company official said this week.
Namib Mills Group CEO, Koos Ferreira told The Economist on Tuesday that the company’s investment through subsidiary company, Namibian Poultry Industries (NPI), in the chicken project inaugurated by President Hifikepunye Pohamba in last year, is in need of any form of protection from the authorities in order to survive competition from cheap imports.
Ferreira said NPI has run up losses amounting to millions since the project started. He, however, could not be drawn to reveal to what extent the project was in the red. He said: “Trade and Industry must make it [protection] available. We just need some protection, whether it is IIP or import export; protection will be protection.
“If we don’t get any protection, then I can tell you it [the investment] is in jeopardy. I saw some figures, but I wouldn’t want to specifically quote a figure at this stage, but it’s a lot. Millions.”
Ferreira said he can only speculate on the reason why the government has not implemented the Infant Industry Protection for the broiler industry despite confirming the approval in writing to NPI and its financiers through the Ministry of Trade and Industry on 28 July 2011.
“We got insurance from the ministry [Trade and Industry] that it has been granted, but I can not tell you why the ministry has not implemented it yet. I suggested that it maybe due to the problems being experienced with the cement court case that is pending,” he said.
Ferreira argued that Namibian Poultry Industries is not in a position yet to compete with South American and EU imports that are subsidized and being dumped in Africa. He added that not even the strong South African poultry industries can compete against these cheap imports and are currently suffering major losses as well with thousands of jobs being compromised in the process.
South Africa has filed a notice at the World Trade Organisation that it intends to formally charge Brazilian producers of dumping.
Ferreira said Namibia is the only country with an “open border” policy that attracts imports from both South Africa and abroad. “This has caused unrealistic low prices in the market, pushing NPI into making substantial losses.”
As a result Ferreira believes that any protection, in some form, was urgently required. He said he was grateful that the government has agreed to utilise the Import Export Control Act, 1994 to give Namibian Poultry Industries interim protection.
If given the protection, expected to be in place before the end of May, Ferreira said Namibian Poultry Industries will be able to compete against the South African and regional industries in the longer run as the company was manufacturing its own feed which constitutes more than 50% of input costs. “We are on the same raw material parity lines as our competitors. [We] erected a new Feed Mill at N$80 million. We get our parent stock from the same source and are in control of the hatching of our own day-old chicks,” he said.
Although the government has agreed in principle to grant Namibian Poultry Industries with Import Export protection, no percentage has been determined yet. “The details of that has to be discussed,” said Ferreira. However, the group CEO believes that Namibian Poultry Industries will probably be able to supply about 70% of the local market’s poultry requirements. “In certain products we can supply 100% and in certain products we can supply nothing.”