Cheap Chicken, Sugar Imports Hit South African Food Producer

(Bloomberg) -- RCL Foods Ltd. is appealing to the South African government to limit cheap imports of chicken and sugar after an influx from the Americas weighed on the local producer.

South Africa is an easy target, with “pretty porous” borders and generous tariffs, Chief Financial Officer Rob Field said by phone on Monday. The Durban-based company is “a highly efficient producer, so there's no issue with supplying the local market at the volume that is required and at a price that is internationally competitive,” he said.

RCL Foods, which makes Sunbake bread, Selati sugar and Rainbow chicken, is also striving to recover from the effects of a drought and a deadly listeriosis crisis that eroded trust in its processed meat even though its own plants were not a source of the disease. The issues with chicken and sugar compounded those challenges, sending earnings, excluding some items, down 26 percent in the six months through December.

“No market can sustain itself when you have dumped imports -- and to the extent that they are coming in,” the CFO said. “Chicken and sugar saw 500,000 tons of each of those products coming into our market and displacing local production.”

RCL is in talks with local government to “find a way to level the playing field,” Field added.

RCL has invested in additional safety measures as the company seeks ways to regain consumer trust after the listeriosis outbreak, Field said. The stock, which has dropped 19 percent in the past year, pared the decline by climbing 7.5 percent by 12:00 p.m. in Johannesburg, valuing RCL at 13 billion rand ($912 million).

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Bowker

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