SA poultry industry wants hefty increase in tariffs to protect local industry
SA Poultry Association says cheap imports from Brazil are hurting the local industry and costing jobs
The South African poultry industry has defended its application for a hike in import tariffs of frozen chicken portions to 82%, saying the cheap chicken imports mainly from Brazil hurt the competitiveness of local producers.
The steep tariffs, for bone-in and boneless portions, will shield the local industry from dumped portions and save thousands of jobs. The poultry industry employed about 50,000 people directly and another 50,000 indirectly, according to Izaak Breitenbach of the SA Poultry Association (Sapa).
Writing in RCL Foods’ 2018 annual report, chair Jannie Durand said the local poultry and sugar industries were exposed to unmitigated dumping of excess supply from foreign markets, which destabilised these industries.
According to Sapa’s poultry meat imports report for October 2018, which is based on SA Revenue Service’s (Sars’) statistics, total poultry imports between January and October 2018 amounted to 483,900 tons. In 2017, the total value of imports was R6.4bn.
Breitenbach, who has taken over as the head of the Sapa Broiler Organisation, on Wednesday said increasing the import tariffs should be prioritised to minimise further harm to the local industry. He said the current tariffs of 12% for boneless portions and 37% for bone-in cuts had not done enough to stem the tide of imports.
“The biggest challenge facing the broiler industry at the end of 2018 is the impact that dumping has had and continues to have. Producers in Brazil, for instance, have financial incentives to export and there is great concern over the traceability of certain imports that are repackaged in S, since some importers flout the legal requirements,” Breitenbach said.
Countries such as Mexico, Japan and Korea had set tariffs of between 109% and 193% for Brazilian poultry imports. “Other countries have established that the competition from Brazilian imports is unfair. The main impact of the cheap imports in SA is in employment. Imports do not create jobs in the value chain. The jobs that get created are in marketing and logistics,” he said.
Sapa on Wednesday announced that Breitenbach, who has experience in milling, poultry, animal feeds and oil seed processing, had taken over as head of Sapa Broiler Organisation following the departure of Kevin Lovell. The organisation represents the interests of commercial broiler producers in SA.
He said negative perceptions about the South African broiler industry were unfounded. “This is an industry that is immensely competitive internationally in terms of those elements of the value chain that it can manage or influence directly,” he said.
He said SA’s semi-arid climate put pressure on local producers’ competitiveness because drought pushed up the cost of feed and grain and necessitates expensive grain imports.
“Chicken prices are established by the price of individual portions, but due to phytosanitary restrictions preventing South African producers from exporting, they are unable to participate in the lucrative EU and US market for white breast meat, which would in turn allow them to subsidise their own [so-called] brown meat, as happens in other countries,” he said.