Image: iStock
The local poultry industry is surprised by the minister for trade, industry and competition’s about turn on imported chicken by suspending dumping duties, saying it may prove to be a boon for the importers, but a bane to South Africa’s second largest job creator and the agricultural sector.
While Minister Ebrahim Patel cited high food prices as a reason for suspending the duties, the South African Poultry Association (SAPA) Broiler Organisation says it leaves consumer prices unchanged and small farmers at risk.
Izaak Breitenbach, general manager of the SAPA Broiler Organisation, says the industry is surprised by the announcement to suspend the implementation of definitive anti-dumping duties against Brazil, Denmark, Ireland, Poland and Spain for a period of 12 months.
The industry was surprised because the minister has shown his support for anti-dumping measures in the past and implemented provisional duties against those countries listed for a period of 6 months, which lapsed on 14 June 2022.
ALSO READ: Chicken dumping tariffs on ice, to help ease price burden on consumers
Following the implementation of the provisional duties, the International Trade Administration Commission (ITAC) called for comments from interested parties. Based on the responses received, ITAC once again found that poultry is being dumped in the South African Customs Union (SACU) poultry industry and that evidence of material harm to the industry can be demonstrated.
ITAC recommended that it would be appropriate to implement anti-dumping duties against Brazil, Denmark, Ireland, Poland and Spain.
Breitenbach says the local poultry industry is sensitive to the plight of cash-strapped consumers and understands that food price inflation can negatively affect consumers.
“However, poultry producers also feel that the minister’s announcement flies against the spirit of the Poultry Sector Masterplan which specifically listed tariff measures as an important pillar to put a stop to dumping.”
He says as such, the decision calls into question the trust stakeholders invested in the masterplan process, as the latest decision seems to demonstrate that dumping is “okay”, even if for only a period of 12 months.
“The decision will not assist the country’s efforts towards localisation, job creation, transformation plans, investment or developing the rural economy. In fact, it may actively cause harm and will certainly disrupt industry investment plans for the foreseeable future.”
ALSO READ: Australia accused of dumping chicken in SA, threatening local market, jobs
The industry is questioning the minister attributing the suspension of the anti-dumping duties on rising food costs and the potential impact on poultry prices without first establishing a causal link between trade measures to stem the tide of dumping and rising poultry selling prices.
“Rising food prices in South Africa (and globally) are driven by global fundamentals in the soft commodity markets of, most notably, high Brent crude oil prices, demand on corn for ethanol production in the US, global weather phenomena, global supply and demand dynamics and more importantly, Russia’s war in Ukraine that has led to lower levels of production in Ukraine and its inability to export their crops negatively impacting global coarse grain prices.”
He says SAPA firmly believes that it is a misnomer to think the lack of anti-dumping tariffs will assist the consumer. The minister’s announcement merely provides the importers a reprieve for 12 months and any “cheap” chicken imports simply goes into the pocket of the importer as healthy margins.
“No evidence exists that importers sell dumped chicken at a low price to the consumer. Once again the importers will capitalise on the opportunity by actively participating in unfair trade practices. Already, total poultry imports exceed the volumes produced by South Africa’s largest local producer.”
Dumping creates a nice revenue stream for global producers elsewhere in the world that want to get rid of their secondary poultry cuts and creates jobs in other countries. Breitenbach says dumping does not help South African consumers or farmers.
“In fact, dumping can jeopardise food security. A healthy sustainable poultry industry is what South Africa needs: one that grows, creates jobs, invests locally and pays its taxes on profits generated. The country cannot import its requirement for protein.”
ALSO READ: Hunger, malnutrition in SA on the rise as food prices go through the roof
The local industry is currently subsidising poultry selling prices as the inability to fully recover record high feed input, fuel and energy costs erodes margins in a market characterised by record levels of unemployment and dwindling disposable income, he says.
One of the primary objectives of the masterplan was to increase the level of locally produced chicken in consumption figures and reduce imports to an acceptable level. To date, the industry has invested R1.5 billion in expanding local processing capacity in support of the masterplan.
“This investment in South Africa’s Agri-processing sector has seen the industry create more than 1,500 new jobs in support of the local economy. Emerging farmers have spent more than R600 million to build new farms to support the increase in capacity at a time when input costs are against the industry on the back of global macro-economic issues.”
Unfortunately, Breitenbach says, not all the available new capacity has been filled with chicken volumes and the suspension of the anti-dumping duty now threatens the industry as capacity will stand idle.
ALSO READ: Latest food basket prices provide little good news for the poor, hungry
He says the industry is considering what to do, but first wants to understand the details of the announcement, such as the level at which the duties will be imposed and the definitive date of implementation.
“Therefore, no firm decision on a way forward has been made, except to say that the industry will actively engage with minister Patel.”
Breitenbach did point out that there seems to be a silver lining to the announcement that included that anti-dumping duties against Brazil and 4 EU countries will be implemented although it is suspended for 12 months. At that time the new duties will take effect for four years.
“Unfortunately, in the meantime, local producers feel that they will have to consider suspending further investments and projects in the pipeline for at least 12 months, given the uncertainty that exists in the near term.”
Download our app and read this and other great stories on the move. Available for Android and iOS.
