MERVYN NAIDOO
Local chicken producers are crying foul over the free pass given to importers bringing dumped broiler meat into the country.
The Department of Trade, Industry and Competition (DTIC) this week gazetted its decision to suspend anti-dumping tariffs on chicken imports from five countries.
But while the SA Meat Importers and Exporters Association (AMIE) lauded Minister Ebrahim Patel’s move, the South African Poultry Association (SAPA) said it would do “material harm” to their already under pressure industry.
According to figures released previously by the Department of Agriculture, Land Reform and Rural Development, the poultry industry produced more than 1.8 million tons of meat in 2019.
Broiler meat has been known to be the largest contributor to the industry’s output and was the preferred form of protein for most South Africans.
Given the great local demand, at least 10% of the country’s chicken needs has to be satisfied through imports.
However, the SAPA has claimed that the chicken brought in from Brazil, Denmark, Ireland, Poland and Spain was being dumped in the country.
European countries and Brazil consumed mainly ‘white portions' (breast), which they deemed to be the best cut.
Discarded ‘brown portions’ (thighs and drumsticks) are usually dumped at knock-off prices (cheaper than the cost to produce in their respective homelands) in developing countries like South Africa.
Accordingly, the SAPA asked the International Trade Administration Commission (ITAC) to investigate the allegations that bone-in chicken portions were being dumped locally by the said nations and the outcome proved to be true.
It recommended that the DTIC impose anti-dumping tariffs on imports from those nations. Patel approved the recommendation that took effect for six months from December to June.
However, in the Gazetted notice, the DTIC said they were cognisant of the rapid food price increase, therefore, the decision to suspend the anti-dumping duties was taken.
Thalukanyo Nangammbi, the ITAC’s communications manager said: “The decision to suspend the imposition of the anti-dumping duties falls within the purview of the DTIC minister.”
Nangammbi said the minister would have considered all the relevant factors in arriving at his decision.
Izaak Breitenbach, the general manager of the SAPA said they were disappointed that dumping was found to be happening but the minister still decided to suspend the duty for 12 months.
“This will lead to increased dumped products that the local industry needs to compete with,” he said.
Breitenbach said load shedding, lack of clean water and high fuel prices placed constant pressure on their operations.
“Now we need to contend with dumping. At present, the industry is subsidising the consumer price due to very high raw material costs.
“The World Trade Organisation is dead against dumping due to its negative effect on the recipient country. It leads to lack of profits, reduced economic activity and job losses. Ghana is a prime example that lost its poultry industry due to dumping,” he said.
Breitenbach said they were concerned about the consumer and have supplied cheap poultry products for many years.
He accused importers of not passing on to the consumers the benefits of importing meat at “ridiculously low prices''.
“This decision by the minister will benefit the importer’s profits,” he said.
Paul Apostolides, the owner of the Port Shepstone-based Riversmead Poultry Farm on KwaZulu-Natal’s south coast, said he hasn’t fully evaluated all the ramifications of the tariff suspension but felt that it would have an overall negative impact on the chicken industry.
“We are fresh producers and we will be indirectly affected because when the frozen price drops to the point that fresh doesn't sell anymore, then we will be directly affected. It all depends on what is going on with prices. The price of grain has gone up and up and profit margins have shrunk over the years. It is not a case of SA chicken farmers scoring with higher prices, we are just keeping up with input costs,” he said.
Apostolides said about 60% of their input cost was chicken feed and when fuel costs were added, that cost figure rose to about 80%.
“We have no control over our huge input costs,” he said.
Amanda Mdodana, a small-scale poultry outfit based in Middleburg, Mpumalanga, said in a recent interview that it cost between R38 to R40 to produce a chicken from day one to day 42.
Mdodana said for her to sell chicken cheaper than that to compete with the imports would mean the end of her operation.
Paul Matthew, AMIE’s chief executive, said they hoped the moratorium on the dumping levies would have been for three years, but commended Minister Patel for being alive to the plight of consumers, and made a bold move to help mitigate the impact of rampant inflation.
Matthew confirmed that the price of imported chicken will drop.
“We will automatically factor these changes into our pricing, and hope that domestic retailers do the same,” he said.
He indicated that while the current tariff cut gave them some relief, their imports were still subject to other charges.
“Other import tariffs were substantially increased in March 2020 and remain in place, which themselves add significant additional costs to poultry.
“The DTIC increased import duties on bone-in chicken from 37% to 62% in March 2020, which has turned the local poultry industry into one of the top three most protected industries in our economy. These tariffs remain in place,” said Matthew.
SUNDAY TRIBUNE