On Friday 1,200 workers at Rainbow Chickens, renamed RCL Foods, who live and work in Hammarsdale, were retrenched. The lay-offs will have a devastating effect on the town.
RCL Foods, after years of fighting chicken imports, has been forced to sell 15 of its 25 Hammarsdale poultry farms just to stay afloat and is considering selling more.
Poultry imports for the first half of 2016 amounted to 288081t, with the EU accounting for 45.5% and Brazil 43.2%. Most of the rest came from the US.
Analysts warn that, for every 10,000t of chicken imported, 6,000 jobs could be lost.
Until recently RCL Foods was the biggest employer in Hammarsdale, with nearly 5,000 workers, after the closure of the textile industry in the area between the mid-1990s and 2002.
It is estimated that 40,000 textile industry jobs were lost in Hammarsdale because of cheap Chinese clothing imports.
Sizakele Lebitsa and Christopher Majola are among the 1200 retrenched RCL workers.
Lebitsa – who has worked for the company for six years – dreamt of building a home. That dream has been destroyed.
“I have five children, three of whom have finished school but who are unemployed. I was the only one working. I am renting property and saving money to build a house for my family, but now I won’t be able to do that.”
Lebitsa also supports her late brother’s three children.
“I don’t know how I am going to cope,” she said.
Majola, who worked for RCL for 34 years, said he had wanted to educate his children and build himself a decent home before he retired. The father of six is worried about their future.
“I was the only one at home who worked,” he said.
RCL Foods managing director Scott Pitman told workers the company had set aside R1-million for their skills development.
“Today is a very sad day. It’s sad to see what’s happening to the poultry industry. It’s sad to break the company down into a smaller business instead of growing it. I want to leave you with some hope. Hopefully, we can fix the chicken industry,” he said.
Jannie Rossouw, head of the School of Economics and Business Sciences at Wits University, said cheap poultry imports could lead to the collapse the local poultry industry.
“It’s still early days and the chicken industry is large so it might adapt to the competition. But at the moment it’s in a tight spot. Cheaper [imported] chicken benefits consumers, but it is not a sustainable way to feed people.”
Economist Azar Jammine said the effect on Hammarsdale would be devastating.
“It will create huge unemployment and affect migration. There are nearby industries that could offer employment but one doesn’t know if workers are mobile enough to get there.”
Jammine said the drought had contributed significantly to the financial stresses of chicken farmers, as had higher grain prices.
“This has further hampered the sector’s ability to compete with cheap imports. Hopefully, when grain prices drop, RCL Foods can recover and re-employ workers. One would like to see the government step in to provide a safety net until jobs open up again,” he said.
Durban Chamber of Commerce and Industry president Zeph Ndlovu called for urgent government intervention to protect the poultry industry and preserve jobs.
“The cycle we face has to do with our trade relations with the US. The pronouncement made by [US President Donald] Trump – “America First” – means we have to review our policy in favour of South Africa. Trade relations for poultry are not good for South Africa. If need be the departments of trade and industry, and of international relations and co-operation, must review the situation.”
The SA Poultry Association has warned that if the local industry were brought to its knees, South Africa would be at the mercy of foreign producers who could raise prices.