Chicken prices are set to rise as antidumping duties, which had been suspended for 12 months, are reintroduced on bone-in chicken portions from five countries to protect the local poultry industry.
The industry, which has faced pressure from high feed costs and frequent power interruptions that have affected production, has complained that it cannot compete with imported chicken, which it claims is sold more cheaply in SA than where it is produced.
In August 2022 minister of trade, industry & competition Ebrahim Patel postponed the imposition of antidumping duties for a year amid concerns that additional tariffs would affect low-income consumers’ ability to buy protein as food prices skyrocketed.
Chicken is an important protein source in the diet of the majority of South Africans.
On Thursday Patel gazetted a separate notice to reintroduce the tariffs. Finance minister Enoch Godongwana approved the reintroduction of the tariffs in a separate gazette, also published on Thursday.
According to the notice published by the finance minister, a maximum antidumping duty of 265% will be placed on chicken imports from Brazil in addition to the 62% tariff that is already in place. More than half of SA’s imported frozen chicken comes from Brazil. The new duties include an additional tariff of up to 158.4% on bone-in imports from Ireland; 96.9% on Poland; 85.8% on Spain and 67.4% on Denmark. The lowest duty is 3% as duties vary between different companies.
In deciding whether tariffs should resume, Patel had to weigh up whether to protect the local chicken industry or consumers, who are already battling food inflation as high as 14%.
It is unclear to what extent the resumption of tariffs will increase the price of chicken as feed costs, which account for 70% of the cost of producing a chicken, have stabilised, easing some of the burden on local farmers. Importers have predicted an increase in prices and a shortage of chicken wings.
Unaffordable
Economist Neva Makgetla has conducted research which shows that tariffs on chicken, which are instituted to protect a “relatively small industry”, make food unaffordable for low-income consumers. She has previously called the chicken taxes “regressive”.
By contrast, the SA Poultry Association has previously stated that tariffs are necessary to protect jobs and the industry, which it described as a “R59bn strategic local asset”. The association commissioned a study by Genesis Analysts, which concluded that tariffs, which are designed to lift prices, would only lead to a maximum 4.5% increase in price.
Importers are not convinced.
Chicken importer Fred Hume said: “Ultimately, consumers are the ones who will now pay the literal price of higher duties. The net result is likely to be perennial shortages of supply of South Africans’ favourite chicken cuts, as we have already seen with chicken wings and leg quarters.”
The Association of Meat Importers and Exporters SA said last month imports keep prices in check and provide a sufficient supply of pieces such as wings that are popular at restaurants.
The department of trade, industry & competition warned the poultry industry not to automatically put up prices of locally produced chicken if the prices of imported chicken pieces rise.
“The minister will ask the Competition Commission to closely monitor the prices of frozen bone-in portions and if there are price increases aimed at taking advantage of the introduction of the antidumping duties, the minister may request the minister of finance to suspend the antidumping duties for a period,” it said.
FairPlay, an NGO funded by the local chicken industry, has welcomed the reintroduction of tariffs. “The decision should never have been delayed. Fears of the impact of new tariffs on retail chicken prices were exaggerated — but struggling chicken producers can now breathe a sigh of relief,” FairPlay said.
“The industry was already battling and in distress when the delay was announced last year. Since then, poultry producers have suffered multiple blows and have been producing chicken at a loss because of the impact of load-shedding, rocketing feed prices and infrastructure failures.”
Losses
SA’s largest chicken producer, Astral, has been selling chicken at a loss, due to high feed costs and the growing cost of using diesel and generators.
The International Trade Administration Commission, part of the department of trade, industry & competition, in 2021 concluded a study that found dumping of bone-in chicken pieces was taking place and negatively affecting the local poultry industry. It recommended antidumping duties to increase the prices of chicken from these markets.
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