Astral Foods Limited (Astral), South Africa’s leading integrated poultry producer, has announced an initiative to alleviate the initial impact of the Value-Added Tax (VAT) increase due to be implemented on 1 April 2018, on all of its chicken products.  Astral supplies in excess of two billion servings of quality chicken per year and fully recognizes that the increase in VAT will undoubtedly hurt its customers, in particular lower income consumers, as the cost of all food will be negatively affected.

Andy Crocker, Managing Director of Astral’s Commercial Division states: “The 15% increase in VAT is a legislated change that businesses are obliged to implement.  Astral has however decided, in the interest of its customers, to absorb the VAT increase for a period of six to eight weeks.  Even though the impact of the increase cannot be avoided indefinitely, Astral will subsidise the transition through a pricing mechanism supporting our primary customers.”

This announcement follows closely on the heels of a press release issued on 15 March 2018 calling for chicken to be added to the basket of goods that are zero-rated for VAT.  Chris Schutte, CEO of Astral notes: “This basket has not been reviewed in the past 25 years and is therefore no longer representative of South Africans’ preferred choice for dietary protein.  The value proposition that chicken offers has made it a clear first choice for meat protein with South African consumers, evidenced by consumption increasing to approximately 40 kilograms per person per year.  Considering the level of unemployment in the country and the inevitable negative impact of the VAT increase on households, Astral is calling on Treasury to review the list of zero-rated basic foodstuffs.”

Crocker concludes: “It is implausible that food producers will be able to absorb any VAT increase open-endedly, however Astral regards this effort to ease the transition to the higher tax level as a unique and deserving Corporate Social Investment (CSI) opportunity, with far reaching benefits directly to our customers.  Astral will continue to pursue more sustainable relief for the South African consumer by participating in constructive engagement aimed at including chicken in the basket of zero-rated VAT goods.”

Source: Astral Foods