RCL announces R620m investment in Hammarsdale plant

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RCL Foods, owner of Rainbow Chicken, South Africa’s second-largest poultry producer, has announced that R620 million will be invested to bring its Hammarsdale production plant back to full capacity.

The Hammarsdale plant, west of Durban, was a victim of chicken dumping, mainly by the European Union. In 2017, when RCL halved production at the plant and retrenched some 1 200 workers, the EU was dispatching huge volumes of dumped chicken portions to South Africa.

Now, EU imports have been reduced to almost zero because of bird flu outbreaks. Import volumes have dropped, and most bone-in portions such as leg quarters come from the United States and Brazil.

After years of losses, Rainbow has a new chief executive in Marthinus Stander and it is implementing a turnaround plan.

Read more about the recent World Poultry Science Association symposium.

Restoration of the plant

The RCL investment will restore the second shift closed in 2017 and create jobs in the region, the company said in a statement at the fifth South African Investment Conference earlier this month. The statement was reported by Just Food.

“The R620 million comprises a combination of RCL Foods’ own investment into its Hammarsdale Rainbow Chicken Processing Plant and Hatchery, and third-party investment by contract growers to increase the supply of chicken to our facility,” RCL said.

“The overall objective is to return the plant back to full capacity, increasing output by 60% over a one-year timeframe. This will increase local chicken supply and drive economies of scale while providing much-needed additional employment.

“The Hammarsdale Rainbow Chicken Processing Plant and Hatchery supplies mostly KwaZulu-Natal across all channels. This expansion is expected to create jobs as we will be reinstating the second shift at the Hammarsdale processing facility,” RCL stated.

Find out more about the 15% growth of the South African poultry industry.

Poultry master plan

In terms of the 2019 poultry master plan, the South African poultry industry committed to investing R1,5 billion in expanded production. It has already met that target and has said that additional investments would be announced.

Read more about the suspension of chicken tariffs in South Africa.

The master plan envisaged that increased production would supply increased domestic demand and a significantly expanded export drive. This would be supported by a crackdown on dumped and illegal imports.

While new production capacity has happened, implementation of the other elements is way behind schedule, and the government has delayed the implementation of new anti-dumping duties on imports from Brazil and four EU countries. – FairPlay Movement

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