Storm over rebates on chicken imports

The decision to approve tariff rebates on thousands of tons of chicken imports is unbelievable and must be reversed, says Francois Baird, founder of the FairPlay movement.

“It will result in a new flow of unwanted and unnecessary imports, putting further pressure on the distressed local poultry industry,” he said.

Rebates on bone-in cuts and boneless chicken

This comes after the department of trade, industry and competition (DTI) and the International Trade Administration Commission (Itac) announced the decision to implement a 25% rebate on bone-in cuts and 30% rebate on boneless imported chicken.

This follows Itac’s announcement in October 2023 it would consider rebates to avoid poultry shortages when SA was hit by a highly pathogenic avian influenza (HPAI) outbreak.

The Association of Meat Importers and Exporters of Southern Africa welcomed the decision, saying the move will play a crucial role in keeping chicken prices affordable.

Trade, Industry and Competition Minister Ebrahim Patel last October ordered an investigation into the possibility of import tariff rebates.

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He directed that any rebates should be “for the duration of the shortage of chicken as a result of an outbreak of HPAI”.

No rational basis for rebates

However, not everyone in the poultry industry supports this decision. The SA Poultry Association (Sapa) argued there was no rational basis for rebates on tariffs.

“There is currently a surplus of chicken after producers imported more than 150 million hatching eggs to assure supply.

“Despite the reduction of millions of chickens last year because of bird flu outbreaks, production has recovered to normal levels of 21.5 million chickens a week,” said Sapa.

Izaak Breitenbach, general manager of Sapa, said they were concerned. He said the two criteria for tariff rebates Patel promulgated was for two reasons.

“One is that there needs to be a shortage of chicken, so that needs to be determined,” he said.

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“The second one, it needs to be because of HPAI. We’ve submitted to Itac detailed information where we surveyed companies in the industry to prove that there is no shortage of chicken in the market.

“Prices of chicken in January have actually come down. Now that indicates an oversupply of chicken.”

Itac stands by estimation of shortage

Itac disagreed and stands by its December estimation that there would be a shortage of 172 000 tons of chicken in SA this year.

Baird said Itac has accordingly issued 65 permits to import 43 000 tons of chicken in the first quarter, and may renew that for a further 43 000 tons in the second quarter.

Agricultural economist Sifiso Ntombela revealed from a trade policy perspective that the rebate was one of the safeguard instruments to correct market disequilibrium.