Growing calls for government to remove VAT on chicken, eggs and other poultry products

Poultry producer, Astral – which was the first to propose this years ago – says it will support such an initiative if it’s revisited.

• Poultry producer Astral – the first to propose this move years ago – says it will support such an initiative if it’s revisited.
• Other small-scale farmers and political parties also call for the zero-rating of chicken feed or similar products on shelves.
• Poultry 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 the News24 Business front page.

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. Its cost of producing a chicken is now exceeded the selling price by R2 per kilogram as unabated load shedding, and rampant feed costs have pushed its expenses to new heights.

But Astral cannot pass on these costs to consumers, who are already battling to make ends meet because of other 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 released earlier this week, Astral said it proposed that chicken be exempted from VAT in the past. It said that food security in SA is now under threat. The increasing cost of the average food basket, which includes poultry as a staple protein, has placed many consumers under extreme stress and will continue to do so.

As a result, should this proposal be revisited, Astral will be among those who support it.

“A couple of years ago, Astral was the first poultry producer to propose that chicken be categorised as a zero-rated VAT product; however, this was declined by government,” said Astral CEO, Chris Schutte. “Should this be revisited, Astral will once again support such an initiative.”

The SA Poultry Producers (SAPA) have also been calling for removing VAT on chicken products. In SAPA’s latest Poultry Bulletin published in December, small-scale poultry farmer, Ade Camngca, of Ruffled Feathers Poultry Farming wrote that most other small and medium-scale farmers would support a call for the zero-rating of poultry feed too.

He believes that removing VAT from feed, even for a limited period, could help lower the cost of producing chicken and thus curb the losses of poultry producers.

He said other governments around the world offer subsidies to stimulate production for their “favoured commodities”, and in SA, poultry should be classified as such because it is the most accessible and affordable of all animal protein sources.

Even political parties have jumped onto that wagon, with the DA saying bone-in chicken should be zero-VAT rated. On Friday, DA MP, Noko Masipa, said the fact that the cost of poultry production in SA now exceeds the sale price, dictates that farmers must increase their prices. But consumers cannot afford more price hikes, especially for food staples like chicken.  

“In many rural and urban areas, poor citizens rely heavily on poultry meat and eggs for safe nutritional protein in their daily diets. This poses a huge threat to national food security. The DA, therefore, reiterates its call for bone-in chicken to be zero-VAT rated.

“Removing VAT on bone-in chicken would benefit the poorest 50% of South Africans,” he said.