The chicken industry is calling on Trade and Industry Minister Ebrahim Patel to re-enact dumping duties on certain chicken cuts from five countries in August, following a 12-month suspension of the tariffs.
The local produces, represented by the SA Poultry Association (SAPA), are hoping for more protection as the industry battles load-shedding that adds over R1 per kilogram in chicken production costs. Chicken feed prices have been very high and are only now dropping after about 18 months with the biggest producer Astral saying in January it was selling chicken at a loss. Feed accounts for 70% of the cost of producing a chicken.
However, The Association of Meat Importers and Exporters SA (AMIE SA) said imports kept prices in check.
CEO of AMIE SA Paul Matthew said: “The decrease in purchasing power of the SA consumer will only be exacerbated by an additional tariff imposed on chicken — the most widely consumed meat protein in the country.”
Matthew also said SA cannot meet local demand for chicken, without imports, especially for pieces such as wings, which are popular at restaurants.
In August 2022, Patel postponed the imposition of anti-dumping duties on bone-in chicken from Brazil, Denmark, Ireland, Poland and Spain for a year as there were concerns that additional tariffs would affect the poorest of the poor ability to buy protein.
Patel, now, needs to weigh up whether to protect the local industry — or try to avoid increasing chicken prices, with consumers battling food inflation as high as 14%.
Matthew said Patel had committed to a period of comment before his decision, which is yet to happen.
Dumping describes the sale of chicken by foreign companies at lower prices than they sell the goods in their own country. As “white” breast meat is very popular in the US and Europe, imported “brown meat” consisting of thighs and legs is often cheaper.
The International Trade Administration Commission (ITAC), part of the department of trade, industry and competition, in 2021 however, concluded a study that found dumping of bone-in chicken pieces was taking place and negatively affecting the local poultry industry. It recommended — anti-dumping duties to increase the prices of chicken from these markets.
Chicken from outside the EU has a range of taxes on it already and anti-dumping duties would be additional.
Both the chicken importers and local industry have paid for independent reports to be conducted by experts to make their respective arguments against and for the tariffs. These reports were this week sent to Patel.
SAPA said on Thursday that a new study conducted by economics advisory firm Genesis Analytics, worked out that had the anti-dumping duties been enacted a year ago, they would have added only 3% to the prices of chicken on average. Had the maximum duties been applied, prices may have risen 4.9%
SAPA claims they need the tariffs to protect the industry which they describe as a ” R59bn strategic local asset” while simultaneously claiming that tariffs, would barely change the end-price consumers pay for chicken.
SAPA GM Izaak Breitenbach said load-shedding added much more to the final price than anti-dumping duties would.
“We can finally see that the potential pass through of these corrective trade measures are negligible at best, especially when compared to the effect load-shedding has had on the poultry price over the last year. Load-shedding adds several rand to the price of locally produced poultry, where anti-dumping duty adds a few cents on selected imports.”
He said industry protectionism through tariffs would protect an industry which is vital for food security.
“We’ve created more than 4600 jobs throughout the value-chain since Covid, and we’ve invested over R2.1bn in the local industry, with another R600-million coming online by the end of 2024”
But Matthew said lower prices were vital for food security and further tariffs would strain trade relationships.
He asked: “Can you or I afford lamb?” saying the sheep industry reveals how meat prices rise when protectionist duties are added.
He also said that importers do not engage in dumping but legitimately import chicken which is rising in price due to the weakening rand. Imports have fallen from 20% of all local chicken to 16%.
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