In the National Assembly |30 March 2022

Subsidies on animal feed, day old chicks to continue, system under review

Payment of subsidies on animal feed and day old chicks will continue and talks are underway to bring about the necessary review of the system without affecting and discouraging producers.

Individual farmers are already on a list and the department of agriculture is setting up the necessary structure to allow it to soon start accepting their claims using the previous format, except that they will be the ones submitting their claims and receiving their payments directly.

Meanwhile, the government currently owes Ferox Feeds R3.1 million which represents subsidies for the month of March. Only requeststs which have been submitted on March 4, 17and 22 and the payments are expected to be cleared during the coming weeks and this will be in four instalments.

Minister for Agriculture, Climate Change and Environment, Flavien Joubert, gave these details in the National Assembly yesterday afternoon when answering an urgent question on the matter by MNA for Anse Boileau Phillip Arissol.

The latter wanted to know the difficulties the ministry was encountering regarding payments for Ferox Feed.

Minister Joubert went on to explain that the difficulties have to do with the subsidy system on animal feed itself and its repercussion on the government’s financial resources which are used to support the subsidy system, the second difficulty is the information received from the company supplying animal feeds.

It is to be recalled that the animal feed as well as day old chicks subsidies system, since their introduction in May 2020, have always been a challenge for the department of agriculture and the ministry of finance.

« This is because it is not a sustainable system in the long term because it involves a lot of financial resources and it does not encourage those taking part in it to be efficient and bring down the cost of products and it does not target the producer directly,” Minister Joubert explained.

He informed Assembly members that for 2020 the total amount of subsidies that was paid for seven months was R29.6 million and in 2021 the money spent on the subsidies amounted to R85.312 million.

« This shows that the subsidies payment has increased from R4.22million per month in 2020 to reach R7.1 million per month in 2021 and we expect it to continue increasing,” Minister Joubert has said.

He went on to explain that the subsidies were paid considering five different aspects in livestock production as follows:

- Slaughter fee to abattoir – paid to abbatoir operator and this represents 5% of the sum;

- refund to livestock farmers after slaughter paid to animal owners and it represents 7% of the sum;

- animal feed represent 76% of the sum of over R85 million;

- day old chicks represent 11% of the sum;

- transportation fees which cover transportation between Mahé, Praslin and La Digue as well as some other islands like Denis and these represent 1% of the sum.

Minister Joubert noted that the aim of the two largest subsidies – for animal feed and day old chicks which are the country’s main priorities today – were to support producers during the Covid-19 pandemic and this has continued during last year.

He reminded Assembly members that R64.4 million from the 2021 supplementary budget was added to ensure continued payment of the subsidy.

Minister Joubert explained that with the persisting difficult economic situation in the world following the Covid-19 pandemic notably the exorbitant increase of more than 300% in the cost of transportation by sea and more recently the cost of products used in the production of animal feed such as maize, his ministry had to let the system prolong into the period after the Covid-19 pandemic but this is not as per what had been agreed with the ministry of finance which had predicted that new measures were to be put in place early this year which would have allowed us to have moved to a system which would have been more cost effective and more detailed.

Minister Joubert said during talks with the ministry of finance, several points regarding the subsidies are being considered namely that:

- subsidies should go to commercial producers registered individually and not the supplier

- slaughter fees and refund after slaughter should be revised to become only one. It is expected that once a new abattoir is operational, the operators should be able to support themselves and not depend on government to support their operation costs.

- subsidy on animal feed which today stands at 38% should eventually reach 0% going through different stages which would depend on developments in the market

- expenses on day old chicks should be adjusted to take into consideration the present day value of the dollar

- cost of transportation - not much change is expected on that side.

It has also been agreed that payment of subsidies should be guided by clear guidelines which define the requirements and conditions that should be satisfied.

Meanwhile, Minister Joubert pointed out that in the 2022 budget the government had put aside a sum of R17 million to cover the following subsidies ‒ slaughter fees, refuse to livestock farmers and transportation costs which existed before 2020.

As a result during the first quarter of this year there has not been enough money for a longer subsidy period and the ministry has found itself with a subsidy payment request amounting to R28 million up to now.

The ministry of finance has been exploring payment possibilities under different existing funds, a process that has taken sometime. Minister Joubert noted that payments to Ferox Feeds have gone through the same process and he has assured Assembly members that they have done their best to clear all the outstanding payments.

With regards to the difficulties surrounding information received from the company supplying animal feeds, Minister Joubert noted that when the system was set up in 2020 all the three suppliers – Ferox Feeds, Mahe Distributors and Meaders Feeds ‒ were asked to submit details on their foreign exchange costs and other details impacting on their prices, namely transportation, freight, as well as costs of raw materials and this is because the subsidies were expected to address the difference in prices brought about by the Covid-19 pandemic.

Minister Joubert highlighted that Meaders Feeds and Mahe Distributors which are not producing locally but importing pre-packed feeds have always done their submissions but not Ferox Feeds.

After his ministry called on the ministry of finance to conduct an audit of the system last year, and this calling for more information from Ferox Feeds, the latter questioned the need for these information and sought other guarantee on how the information would be used. Minister Joubert said the matter has to date not fully been resolved. This resulted in payments dating since 2021 which have not been released until recently for lack of sufficient details on price increases.

Meanwhile, Minister Joubert has pointed out that Ferox Feeds’ decisions to reserve the right not to accept new clients with the aim to keep existing clients as well as to put an end to the credit facilities for its clients, are two decisions which are outside its agreement with the ministry and they are based on the company’s commercial strategy which is entirely private.

Furthermore, he added that farmers and producers are also consumers seeking good suppliers who would give them the best deal and value for their money.

Minister Joubert noted that there are three suppliers on the market and with measures being considered, soon farmers will be offered more options to buy their animal feeds.

He also noted that storage for feeds is a problem which is being looked into.

With regards to day old chicks, Minister Joubert said there is a need for another hatchery to give producers more choices and boost competition.

Currently importation from Mauritius is taking place alongside production from Ferox Feeds’ hatchery.

There are also other operators who have expressed the desire to join the business and the government will work with them to make this happen as soon as possible.

Marie-Anne Lepathy