Suspended tariffs wreak havoc in SA’S poultry coop
The raging argument between major stakeholders in the poultry sector over the impact of the recently suspended higher tariffs has raised the spectre of more than 13 000 jobs being lost in the sector.
THE raging argument between major stakeholders in the poultry sector over the impact of the recently suspended higher tariffs has raised the spectre of more than 13 000 jobs being lost in the sector as an impending deluge of imports is feared to usurp local producers’ market share.
The Food and Allied Workers Union (Fawu) said in the Western Cape alone at least 1 000 jobs were at risk while on a national average, taking into account workers in the grain, animal feed processing and plantation sectors, this figure could be at more than 13 000 jobs.
“We are hoping to meet soon and put that issue under discussion, but then again, we are on record asking to meet with the minister to discuss the implications of this,” said Fawu’s deputy secretary general, Vuka Chonco.
Many jobs were lost in the industry as a result of dumping between 2012 and 2015, when imported chicken took between 30 percent and 35 percent of the market, Chonco said.
This had resulted in street protests to fight for locally produced chicken.
“We won that fight because foreign chicken is 25 percent and local chicken is 75 percent,” he said.
The comments come after Minister for Trade, Industry and Competition Ebrahim Patel earlier this month announced the suspension of a higher tariff regime on bone in chicken, such as thighs, wings and leg quarters.
The higher tariffs would have seen countries such as Brazil levied 265 percent, Ireland 158 percent, Denmark 67 percent, Poland 96 percent and Spain up to 85 percent on bone in chicken, after a ruling in December by
the International Trade Administration Commission (Itac), a regime that regulates the movement of goods across South Africa’s borders.
Brazil is thus far the only country of the five that is able to benefit from the minister’s largesse as the European countries are struggling with bird flu, which has put a halt on exports.
Eight Brazilian companies face lower anti-dumping duties – ranging from 8 percent to 35 percent .
The 265 percent rate will apply to all other producers in a year’s time, or sooner, if Patel decides food inflation is abating sufficiently.
Ireland’s case differs. Under the provisional tariffs, imposed by Itac, all Irish bone-in chicken imported into South Africa between December 2021 and June 2022 was subject to anti-dumping duties of 158.42 percent.
Itac’s final recommendation was for duties ranging from 2.49 percent for one producer to 37.5 percent for all other producers.
Trade movement Fairplay said this week, “There is no indication of how long it will be before the four dumpers are declared free of bird flu and licensed once again to send chicken to South Africa.
“But if bird flu is lessening in the EU, a resumption of exports may well happen before the 12-month suspension of anti-dumping duties ends next year. That would mean South African producers facing another flood of unfairly priced and dumped chicken from the EU.”
Daniel Mackay, a director at XA Trade Advisors, said higher poultry tariffs appeared to be an easier trigger to pull for local producers and the Itac over factors such high electricity prices, labour costs and lack of service delivery, all of which affected local poultry producers.
He said the figures of imports of chicken cuts were exaggerated.
Not only were locally produced thighs, wings and leg quarters insufficient
to meet demand, but mechanically deboned meat, which is the staple for polony and sausage producers, was not available at all locally, he said.
“Why should we levy tariffs on products that we are not able to supply adequately locally? It is also a misconception that these cuts are not wanted at the point of origin. South Africa is willing to pay a premium to import these cuts because they have higher demand here,” he said.
Mackay also clarified that Patel’s decision overrode an Itac recommendation, which held that there was a case for dumping and that material injury had been inflicted on local producers.
“Itac looks at 19 indicators which indicate if there has been material injury, such things as the drop in the selling price, erosion of profits for local producers, stock levels and such things. It was found that there was no injury on the local industry, prices were going up, imports out of
the five countries were not eroding the market; what material injury was suffered was not due to indicators but lack of competitiveness, and there was a drop of 34 percent in competitiveness,” he said.
Chickenfacts, also an industry player concerned with tariffs on poultry imports, said while it was true imports made up 26 percent of poultry consumed in the country, the figure included all imports from all countries and included three types of chicken.
“If one removes the two types of chicken that we are compelled to imports, ie the wings and MDM (mechanically separated meat), and only looks at imports from the five countries, the percentage is closer to 13 percent. This has been steadily declining from a height of about 17 percent in 2018,” Chickenfacts said.