Abysmal jobs numbers should spur state to protect chicken industry, says Fairplay
An organisation which aims to fight predatory trade practices and dumping says the latest unemployment statistics should act as a spur to government and to efforts to protect the chicken industry against unfair trade which has already cost thousands of jobs.
Fairplay said on Wednesday thousands of jobs could be created in the poultry sector by replacing chicken imports with local production.
Earlier in the week, Stats SA revealed abysmal unemployment numbers. SA's official unemployment rate increased to 29% in the second quarter of the year, the highest jobless rate in more than a decade.
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“As South Africa’s horrific unemployment rate reaches new record levels, politicians and policymakers should take an urgent look at the opportunities offered by SA’s chicken industry,” said Francois Baird, founder of FairPlay.
“We have frequently highlighted the opportunities that could be realised were the chicken industry enabled to expand and create jobs, particularly in poor rural areas where unemployment is highest.
“Those opportunities remain blocked because the floods of dumped chicken imports have stolen so much market share that industry expansion can’t happen. Thousands of local jobs have already been lost, and company profits are down, while the industry awaits the outcome of an application for tariff protection against this unfair and predatory trade, particularly from Brazil,” said Baird.
SA’s poultry sector has recorded a jobs bloodbath in recent years and has ascribed its demise to cheap chicken imports from Brazil, the US and Europe.
The SA Poultry Association has lodged an application to the International Trade Administration Commission (Itac) — the organisation tasked with customs tariff investigations, trade remedies, and import and export control — calling for an increase to the ad valorem tariff on bone-in and boneless frozen chicken portions to 82% from existing levels of 37% and 12%, respectively.
Baird said that while chicken importers oppose tariffs and would “apparently rather see jobs being created in Brazil, FairPlay believes that our government should be focusing on every possible opportunity to create jobs here, and particularly for the youth.”
“The local chicken industry has said it is willing and able to do this — major producers have excess capacity and the SA Poultry Association estimates that 30,000 jobs could be created by replacing chicken imports with local production. All that is needed is to free the industry from the shackles of unfair and predatory trade.”
However, according to the Association of Meat Importers and Exporters (AMIE), although some jobs will be created in the poultry industry, tariff increases will have a net negative impact on jobs across the economy. Furthermore, it says, consumers will have to pay more for chicken should import tariffs be hiked.
According to research conducted by international business advisory firm FTI Consulting on behalf of the AMIE, approximately 1,618 new jobs will be created in the broiler/poultry sector following the ordinary duty increase. But jobs losses in other sectors will outweigh the new jobs created in that sector.
“There will be a net loss of 1,440 jobs due to employment losses in the rest of the economy,” the association said, adding that the tariff increase will lead to a drop in GDP of R1.1bn in the first year.
The AMIE said a policy designed to reduce domestic unemployment via foreign trade should not ignore the employment effect of SA’s participation in trade.
“Imports also create employment through, for example, support services such as inspections, clearing agents, transport and monitoring laboratories.”
Trade protection will also create an immediate supply gap which local producers will hope to fill, but this will come at a high cost to the economy. The drop in imports will cause an immediate supply gap of between 44,650 and 108,839 tonnes in the local market, the AMIE said.