Chicken Farmers SA in a section on the suspension of anti-…
Described as a victory for consumers, the government’s decision to suspend anti-dumping duties on chicken imports from Brazil, Denmark, Ireland, Poland and Spain has been welcomed by the Importers Association and SA Meat Exporters (AMIE), but the South African Poultry Association (SAPA) is far from thrilled. He warned that failure to replace provisional anti-dumping duties when they expired in June has put local industry at risk.
AMIE, meanwhile, says the decision shows the government was “putting its citizens first.”
This is not the result hoped for by the association, which had previously requested a three-year moratorium.
In March 2020, the government raised import duties on bone-in poultry products from 37% to 62%, to protect the domestic poultry market. Chicken imports account for 14.9% of all chicken consumed in South Africa, but local producers have complained for years that cheap chicken is being sold to South African consumers.
South Africa does not produce enough poultry meat to meet domestic demand, so imports are needed to cover the shortfall in domestic consumption.
Chicken meat, the most affordable source of animal protein per kilogram in South Africa, dominates the livestock sector in terms of production. The land bank May 2022 Poultry Industry Information Report said that from 2005/06 to 2019/20, chicken meat was consistently consumed more than pork and beef.
In 2019/20, chicken meat had a per capita consumption of 39.3 kg compared to 18.1 kg for beef, 5.2 kg for pork and 3.1 kg for mutton. Poultry meat imports, as a percentage of domestic consumption, fell from 27.8% in 2018 to 19.8% in 2021.
Land Bank’s exposure to the poultry industry in March 2022 was small – only around 2.2% of its total loan portfolio of just over R25.7 billion. The bank said that SA cannot currently produce mechanically deboned meat (MDM) – used in the production of processed meat products such as sausages and polony – there are opportunities in the processing sector of the meat chain. value she could explore. MDM, mainly from Brazil, constitutes about 37% of South Africa’s poultry imports.
The Fair Play Movement, a local chicken industry lobby group, says chicken imports hit a record high in 2018, when 566,000 tonnes were imported at a cost of R6.1 billion. In 2019, imports were 5.5% higher than the five-year average from 2013 to 2017.
“This is poultry that could and should be produced in South Africa, in local facilities creating local jobs. Instead, local production is squeezed and jobs are lost. Chicken is South Africa’s cheapest and most popular form of animal protein, and demand is growing. However, the increased demand is being absorbed by imports and local producers are suffering as importers corner market share,” Fair Play said.
The SA Poultry Association had requested an ad valorem import duty of 82% on frozen bone-in or bone-out chicken. Safeguard duties were approved against all EU countries in 2018 at an initial rate of 35.3%. For all other countries outside the EU, an import duty of 62% on frozen poultry portions applied, which was granted in 2020 (compared to 37%) and 42% for frozen boneless portions (compared to 12 %).
“This action taken by the South African government implies recognition of a predatory and unfair trade in the importation of chicken into South Africa,” Fair Play said.
“Living to the fate of the consumer”
The tariff suspension was announced in the Official Journal on Monday.
“In making his decision, [Trade and Industry Minister Ebrahim Patel] given the current rapid rise in food prices in the [Southern African Customs Union] market and globally and the significant impact this has, particularly on the poor, and the impact that the imposition of anti-dumping duties can have on the price of chicken as one of the sources of most affordable proteins.
“The Minister has therefore decided to suspend the imposition of anti-dumping duties for a period of 12 months,” the statement said.
The AMIE hailed the decision, calling it an “exceptional result” for consumers, who are under such significant financial pressure.
“Chicken is the most affordable and therefore most vital source of protein for South African consumers, especially those living below the poverty line. This shows that our government, and in particular Minister Patel, is aware of the plight of consumers and ready to take bold action to help mitigate the impact of runaway inflation, which is encouraging,” said Paul Matthew, CEO of AMIE.
In April 2022, the AMIE asked the government to consider a three-year moratorium on tariffs on imported chicken to help curb inflation, that existing tariffs be reviewed and that all chicken parts be exempt from VAT.
In June, the association wrote to the Minister of Finance (as the final decision-maker on the imposition of duties and tariffs), urging him to investigate the imposition of anti-dumping duties.
“The suspension of additional tariffs on chicken imported from these five countries is a first step in the right direction, and we hope to see more such actions from the government in the future,” Matthew said. in a statement released Monday.
“Governments around the world have reduced import tariffs to help their citizens survive. Mexico, the Philippines and South Korea have removed tariffs on imported products, including chicken, to curb and mitigate the impact of rising inflation on their populations. The United States is currently considering removing its tariffs on various products for exactly the same reason. »
Cheap as chips
In June, Izaak Breitenbach of the South African Poultry Association raised concerns about chicken dumping. He said The Farmers’ Weekly review who Australian chicken thighs used to arrive in South African ports at around R6.89/kg.
“This is the lowest price of all [portion] of meat from any country in the world. It is even less than [the price of] chicken feet, which are generally less expensive than [other] Meat .”
With exporters from outside the EU paying a 62% import duty on poultry products, this meant that the import tax on this poultry would be R4.27, bringing the total cost to R11. .16 rand/kg, he said.
“We don’t mind importing poultry at competitive rates, but dumping destroys local jobs and harms the local poultry industry. Dumping is not acceptable according to World Trade Organization guidelines [either]. This is why there are certain remedies [such as tariffs] that countries can apply to prevent dumping.
“Beyond load shedding, access to clean water, rising fuel and feed costs, the South African poultry industry faces one of its biggest threats to this day: the non-renewal of import tariffs. This leaves South Africa’s second largest agricultural industry vulnerable to dumping; a practice that almost destroyed it before the signing of the Poultry Sector Master Plan.
The master plan, which was signed in November 2019 by the government, poultry industry, importers, worker representatives and others, aimed to boost local demand, boost exports and protect the local chicken industry. .
R1.5 billion spent on expansion
On July 25, SAPA released a statement indicating that its members had invested over R1.5 billion in expanding poultry processing capacity in the local industry, with an additional R570 million planned for 2023. , to support food security, the creation of local jobs, rural development and additional income for the tax authorities.
“As well as investing in the industrial development of the sector, emerging black farmers and contract growers have also been supported with an injection of R474 million in additional cash flow.
“Since 2019, the sector has created 1,465 new jobs, with another 800 in the pipeline as investments come online in 2024. Additionally, the growth of the poultry industry has had a significant impact on the wider value chain, with AFMA reporting the addition of over 2,000 new jobs in the agricultural sector along the poultry value chain.
“Like so many South Africans, the poultry industry has had to deal with load shedding, access to fresh, clean water, rising fuel costs, rising feed costs and at a less than desirable exchange rate, yet despite these challenges the industry still produces the cheapest chicken our rands can buy.
“Despite this extremely difficult production environment, the greatest threat to the South African poultry industry – and by extension South African consumers – is unfair trade practices from countries such as Brazil, Ireland, Spain and Denmark who dump their product on the South African coasts”.
He said that while SA’s International Trade Administration Commission (ITAC) had considered imposing anti-dumping duties, provisional anti-dumping duties were in effect from December 2021 to June 14, 2022, which have now expired.
“As of June 12, 2022, Trade and Industry Minister Ebrahim Patel had 60 days to react to the ITAC report, citing material harm suffered by the local poultry industry as a result of the unfair trading practices employed. by these countries. With no temporary or permanent rights in place, the local poultry industry is at risk and the negative impacts can already be measured.
“South Africa is currently open to predatory trade from other countries, and progress towards achieving the goals of the poultry sector master plan is at risk. Allowing dumping to continue undermines the pillars of the poultry sector’s blueprint, and seriously undermines and endangers the South African poultry industry – a R56 billion strategic economic asset.
He said that, as seen in countries like Ghana, Senegal and Cameroon, dumping can destroy an industry – “without these tariffs in place, we could see the systematic dismantling of the poultry industry in South Africa, leading to massive job losses and severe economic contraction.” DM/BM