Poultry producers fear cheap chicken imports
South Africa must strike a balance to preserve the local poultry industry while securing chicken supplies through a possible rebate on import taxes and duties, says International Trade Administration Commission (Itac) chief commissioner Ayabonga Cawe.
“It’s really about trying to confront what we believe could be an availability crisis and a pricing problem. Without trying to preempt the investigation, this is precisely why we are considering a rebate rather than doing away with duties altogether,” Cawe said.
Minister of trade, industry & competition Ebrahim Patel issued a directive this week for Itac to consider a temporary import duty rebate on fresh, chilled or frozen chickens ahead of a looming shortage as a result of a severe outbreak of avian flu (HPAI).
Cawe told Business Times that if a rebate was implemented, importers would not have to pay the import tax. He said Itac would consult with the department of agriculture for guidance on the potential impact of such a rebate.
“As a result of this outbreak, there has been a shortage of birds for slaughter, and eggs. The minister is empowered by the International Tax Administration Act to direct the commission to consider whether, in light of the shortage, we might want to consider a time-bound or temporary rebate.”
Cawe said domestic producers, importers, consumer bodies and members of the public have until October 16 to comment on the proposed rebate.
“What guides our work is policy directives from the minister or any other self-initiated reviews that we will undertake. The minister said that this should be undertaken in an expedited manner because any day extended on this has an impact on households that cannot afford it.”
As the chicken shortage looms, retailers have been rationing eggs to ensure supplies.
Cawe said Patel’s directive did not need to include eggs as they are duty-free.
The industry is concerned that the rebate will expose the sector to dumping.
Izaak Breitenbach, general manager of the Broiler Organisation of the South African Poultry Association (Sapa), said the industry has been in distress since the beginning of the year, incurring substantial losses due to load-shedding and rising operating costs, including fuel.
“On top of that the load-shedding has materially impacted the cost structure of the industry and the industry to date has been unable to recover these costs. Now we are battling a devastating HPAI outbreak in which the broiler industry had to cull 30% of its total flock to date with no signs of the disease abating. This is a harsh blow that is costing the industry billions of rands.”
Breitenbach said Patel’s directive could force the industry to compete with dumping. “This is an additional burden that the industry simply can’t carry and will lead to companies closing their doors, job losses and hardship,” he said, adding that Sapa would respond to the proposed rebate on behalf of the industry.
Eagle’s Pride Hatchery technical manager Greg Celliers said the group was concerned that there had been no indication from the government that affected poultry operations would be compensated for their losses due to the outbreak.
“Allowing cheap imports of poultry
products will simply make the local producers more uncompetitive in these challenging times. Producers are dealing with the increased cost of production due to lower throughput in all facets of production due to avian influenza, high feed cost, load-shedding and the increased cost of electricity, a record high diesel price and water shortages,” said Celliers.
Cawe said the outbreak had food security implications and the commission could foresee this having an impact on the prices of poultry as a staple product.
He said the commission could prescribe conditions to ensure that the rebate determines a fixed tonnage of meat that will be allowed into the country. It would be a temporary rebate bound by the severity and duration of the crisis.
“These rebates are not an open-ended thing. Importers who want to make use of this will have to apply for a rebate permit which we would administer for this product. We have one for chicken from the US under Agoa [the African Growth and Opportunity Act]. We already have processes where we work alongside importers for a rebate provision, subject to a certain tonnage per annum.”
Paul Matthew, CEO of the Association of Meat Importers and Exporters, said the industry welcomed Patel’s “progressive thinking”.
“We are pleased to see government has been proactive in placing at the forefront of discussions ... the best interests of South African consumers who are severely impacted by a continued and sustained rise in food prices due to the current outbreak of HPAI.”
Matthew said access to affordable protein sources remained a critical issue facing the poor in South Africa.