Rebates on chicken bad

Only justification would have been shortage of birds. UNFAIR: TARIFFS RISK EXACERBATING OVERSUPPLY

Chicken importers are not good at sticking to the facts. As a result, readers of The Citizen have been denied a proper understanding of why rebates on chicken import tariffs are a bad thing.

In your report on 5 April “Poultry industry divided: Import tariff rebate throws a cat in the henhouse”, the comments of importer Fred Hume confuse rather than clarify the issue.

The fact is that the rebates should not have been imposed at all. They were created to encourage additional chicken imports in the event of a shortage caused by bird flu. As there is no shortage, there is no need for any tariff rebates.

Had the implementation of the rebates been challenged in court, the government would probably have lost. The only legal justification for the rebates would have been a shortage of chicken on the local market – very difficult to prove when the market is actually in surplus and prices are falling.

Not only are the rebates addressing a non-existent problem, but they will exacerbate the current oversupply. So, instead of filling a supply gap (because there isn’t one), the subsidised chicken imports will unfairly take market share from local producers. This threatens local farmers and local jobs with unfair competition.

Despite this, Hume insists that importers and local producers are rarely in competition because they serve different markets. “We’re predominantly importing cuts that the local market does not supply in abundance, such as wings and drumettes,” he assured The Citizen in the article.

Official import statistics tell a different story.

In 2023, South Africa imported 71 000 tons of bone-in chicken, of which 69% was leg quarters. Only 15% was drumsticks and 8% chicken wings, which Hume seems to think are the biggest import volumes.

He implies that local chicken producers concentrate on quick service restaurants such as KFC, “leaving the rest of the market dry”. Again, official statistics show Hume is mistaken.

Firstly, more than 80% of the chicken South Africans buy is locally produced. The rest of the market is not “dry” as Hume puts it – it is served by local poultry farmers whose chicken products sell in retail shops and on the street across the country.

Secondly, just under 20% of locally produced chicken goes to the food service industry.

Nearly half of local production goes into packs of individually quick frozen (IQF) chicken portions – the popular 2kg and 5kg packs sold in local supermarkets.

And it is here that the unfair competition is felt from imported frozen chicken portions. The unfair competition from chicken imports is real, not imaginary. And it is now being subsidised by unfair rebates that reduce the import price of leg quarters, thighs, drumsticks and chicken wings.

The rebates will, by design, encourage more of these unwanted and unnecessary imports and support jobs in other countries.

This threatens SA farmers and local jobs