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No pot of gold at the end of this rainbow

Oct 02 2016 08:25
Paddy Harper

More than 1 000 jobs at KwaZulu-Natal’s most iconic chicken producer, Rainbow Chicken, are under threat as the glut of cheap poultry imports takes its toll on the local industry.

This week RCL Foods, the company that owns Rainbow, served a formal notice of its intention to retrench for operational reasons in terms of section 189 of the Labour Relations Act.

Rainbow’s main processing plant is located at Camperdown, outside Pietermaritzburg in KwaZulu-Natal.

While the company declined to talk about the extent of the proposed retrenchments, citing the sensitivity of the matter, union sources claim that 1 033 permanent and seasonal workers face losing their jobs, in terms of management’s proposals tabled at a meeting with unions.

August Mbhele, the KwaZulu-Natal organiser for the Food and Allied Workers’ Union (Fawu), which is the majority union at Rainbow and RCL, said on Friday that of the 1 033 jobs threatened, 588 were permanent.

The rest, Mbhele said, were seasonal or contract posts, with the bulk of the proposed retrenchments taking place at the company’s P2 processing plant at Camperdown.

There are a smaller number of jobs under threat at RCL farms in the Eastern, Western and Northern Cape, as well as Gauteng.

“Last week, management informed the national forum it convened that it was considering [undertaking a process of] retrenchment,” said Mbhele.

“On Thursday the company made an official presentation to organised labour of its proposals for restructuring,” he added.

“There was an agreement that the two parties would not handle this alone, and we jointly requested the intervention of the Commission for Conciliation, Mediation and Arbitration going forward to find a resolution.”

Mbhele said the flow of cheap, “dumped” chicken – particularly from Brazil – combined with the drought and increased water and feed costs, resulted in RCL producing more chicken than it could sell.

“The cheap imports are killing this industry. What is happening here at Rainbow is a result of that,” Mbhele said.

“We will put forward our own proposals about how we feel we can save people’s jobs or stop the retrenchments completely. We have a responsibility to try to be creative and look at how we can stop both organised workers and the un-unionised and temporary staff from losing their jobs.”

RCL chief executive Miles Dally said total chicken imports – excluding mechanically deboned chicken meat – between June 2015 and June 2016 had increased by 43% on the previous year, with an average of 27 500 tons of imported chicken being sold a month.

“With the local market in such massive oversupply, it has become impossible for local producers to compete, ultimately threatening the viability of the industry.

“Furthermore, any resulting rationalisation in the chicken industry is expected to have a knock-on effect on the wider value chain, such as animal feed and distribution, as well as other service providers and suppliers, including maize farmers,” said Dally.

Dally added that RCL’s chicken business had run at a loss for the past five years.

“Although we have implemented various corrective measures to return to profitability, the excessive increase specifically in dumped commodity chicken over this period has cancelled out the gains we have made in this space.

“Without immediate relief on the horizon, we have to consider a restructure of the commodity chicken component of our business,” he said.

Dally said RCL’s immediate objective was to “reduce the volume of commodity chicken produced” and “downscale our commodity chicken component”, while pursuing growth in its added-value and food-service categories.

Dally said RCL would only be able to provide figures of how many employees it needed to retrench when the negotiation process with unions was over. “The process of consultation with all affected employees and relevant unions has started. Only once this has been concluded will RCL Foods be in a position to assess the impact on job numbers.

“In the interim, the company will continue engaging with its stakeholders – including customers, suppliers and employees in its related feed and distribution operations – to work through the implications of the proposed changes,” he said.

Dally added that RCL and other chicken producers had appealed to government to stop the inflow of cheap, dumped chicken as it was resulting in an oversupply against which locals could not compete.

KwaZulu-Natal Economic Development MEC Sihle Zikalala this week called on management and labour to come up with a means of saving jobs at Rainbow, which is central to the local economy in the Camperdown area.

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