Agoa re­newal: Lo­cal poul­try in­dus­try loses out

Finweek English Edition - - IN THE NEWS - BY TINA WEAVIND

Thou­sands of jobs and around R900m in rev­enue in the poul­try in­dus­try have been put on the line so that South Africa can re­main a ben­e­fi­ciary of Amer­ica’s African Growth and Op­por­tu­nity Act (Agoa).

The 15-year-old trade agree­ment al­lows 39 sub-Sa­ha­ran coun­tries to ex­port – duty-free − more than 7 000 prod­ucts to the world’s big­gest econ­omy. It’s non-re­cip­ro­cal too, so the ben­e­fi­ciary coun­tries are un­der no obli­ga­tion to pro­vide duty- or quota-free ac­cess to their own do­mes­tic mar­kets for US goods.

South African ex­ports ac­count for 70% of Agoa’s (non-f uel) prod­ucts. Agoa’s ben­e­fit to SA last year clocked in at $3.5bn (R43.5bn) in for­eign ex­change earn­ings. In­di­rectly through job cre­ation and nu­mer­ous down­stream busi­nesses, the agree­ment is worth bil­lions more.

In­dus­tries such as cit­rus fruit, wine and, im­por­tantly, ve­hi­cle man­u­fac­tur­ing are at least par­tially pow­ered by the largesse of the US’s trade pol­icy.

But from next year, at least 65 000 tons of US chicken pieces will be sold in lo­cal su­per­mar­kets. The bone-in brown meat pieces − pri­mar­ily leg and thigh − are ex­pected to un­der­cut lo­cal prices and scythe the prof­its of pro­duc­ers.

Last month, JSE-listed As­tral Foods, which bases its busi­ness pri­mar­ily on chicken, warned the im­ports were likely to neg­a­tively im­pact lo­cal farm­ers. But hav­ing bar­gained the US down from its ini­tial quota de­mand of 110 tons a year to 65 tons a year, the com­pany said the deal, which was in­te­gral to the ex­ten­sion of the Agoa agree­ment, was ac­cept­able.

Since 1999, SA has had in place an an­tidump­ing duty of R9.40/ kg on chicken com­ing in from the US. This is in ad­di­tion to the 37% tax on all chicken im­ports, most of which come from the EU. Amer­ica has de­manded that this an­tidump­ing duty be pulled and that the coun­try be al­lowed to com­pete on the same ba­sis as other im­porters.

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