Trade, industry & competition minister Ebrahim Patel has suspended antidumping duties on chicken imported from five countries for the next 12 months, citing the fight against food inflation and its effects on the poor.
With neither provisional nor permanent duties in place, the move puts SA’s second-largest agricultural industry at risk of anticompetitive behaviour, with the SA Poultry Association (Sapa) saying the negative effects can already be measured.
The temporary duties range between 3% and 265% and were implemented on exports from Brazil, Denmark, Ireland, Poland and Spain last December in a bid to protect the local industry from predatory behaviour and to level out prices. The duties were due for review and renewal in mid-June.
In the Government Gazette on Monday, the International Trade Administration Commission said Patel opted to suspend the protectionist tariffs having considered the rapid rise in food prices in the local market and globally, and its significant effects, especially on the poor.
The suspension of the protectionist tariffs on imported chicken is expected to help curb inflation in the price of the protein of choice for millions of SA consumers.
Import tariffs on foods that are staples for poor households increased sharply from 2013, economist Neva Seidman Makgetla found in a study for the Reserve Bank in 2021. By 2020, poultry, wheat, beef, sugar and cooking oil were all subject to above-average tariffs, ranging from more than 50% for poultry and sugar to 10% for cooking oil.
Those lobbying for the measures to be retained have cautioned against the dire effects on local jobs and food security if SA chicken producers were not defended against unfair imports.
Sapa said the nonrenewal of import tariffs left the industry vulnerable to dumping, a practice that it said had nearly destroyed it before the poultry sector master plan was signed.
“Despite this exceedingly challenging production environment, the biggest threat to SA’s poultry industry ... is unfair trade practices from countries such as Brazil, Ireland, Spain and Denmark, which dump their products on SA shores,” said Izaak Breitenbach, the GM at Sapa’s Broiler Organisation.
“The industry still produces the cheapest chicken our rand can buy.”
Domestic producers
For food producers such as Astral Foods and RCL Foods, the suspension of the punitive antidumping duties will not play out well, said equity analyst Anthony Clark. “This will not go down well with domestic poultry producers as imports have been rising for much of 2022, despite the antidumping duties and weaker rand,” Clark said.
Market reaction to the announcement was mixed. Astral’s shares dropped 2.39%, while RCL’s ended unchanged.
The SA Meat Importers and Exporters Association (AMIE) welcomed the suspension, saying it was a major win for cash-strapped SA consumers.
“The liberalisation of trade policies can help consumers,” said AMIE CEO Paul Matthew, adding the move was a sign that Patel and his team were alive to the plight of consumers and ready to take bold action.
AMIE has also asked for existing tariffs to be reconsidered, and for all chicken cuts to be exempted from VAT.
Having led the charge in April for a suspension of poultry tariffs, the DA welcomed the “dramatic and humiliating about-turn” by the minister.
Criticising Patel’s strategy on master plans and continued tariff protections, the party said “businesses should be assisted to become more competitive to drive down the costs of production instead of relying on government protection”.
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