Picture: BLOOMBERG/DANIEL ACKER
Picture: BLOOMBERG/DANIEL ACKER

The war of words between local and international poultry producers has intensified following the publication of a EU-funded report which found that the local industry’s recent demise was not caused by unfair offshore competition.

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. This has brought it into conflict with SA meat importers who blame the lack of competitiveness of the local poultry industry for its woes.

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 in the ad valorem tariff on bone-in and boneless frozen chicken portions to 82% from existing levels of 37% and 12% respectively.

According to a report by DNA Economics commissioned by the EU-SA Strategic Economic Partnership, the reasons for the slow growth of production and exports by the SA broiler industry and for the increasing share of imports in meeting local demand are matters of considerable contention.


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The analysis undertaken indicates that the main reasons for the slow growth of output of the SA broiler industry and for imports to be playing an increasing role in meeting SA demand include the rapid increase in demand for chicken products not produced in SA in recent years, chiefly mechanically deboned meat used to make products such as polony.  Furthermore, the report states, the dominant SA business model, together with the limitations of the country’s productive capacity, have largely precluded local producers from accessing export markets to date.

“Notably, the industry does not generally seem to have been subject to unfair competition from offshore exporters and, to the extent that it has, it has usually been able to secure effective tariff defence,” according to the report.

Furthermore, the report highlights that in terms of technical and economic efficiency, SA producers can in most years equal, or better, all of the countries from which SA usually imports, other than Brazil and the US.

“Disease outbreaks have played a role in constraining the growth and increasing the costs of broiler production in SA, but it is uncertain how significant this has been,” the authors of the report say.

Fairplay, an organisation which aims to fight predatory trade practices and dumping, said the report will neither help to solve the local industry’s problems nor create more jobs in SA.

“The predatory chicken trade practices from the EU and Brazil are creating unemployment among poor people in SA and then blaming them for their plight,” said Francois Baird, founder of FairPlay.

“Like the EU has pretended for some time, their study purports to focus on the export potential of the SA chicken industry and the many problems associated with that, but pays little attention to the damage done as a result of an ever-increasing flood of predatory imports, in which the EU and Brazil have played starring roles,” he said.

The challenge facing the local industry is not exports — “it is creating the conditions in which local production can expand to claw back some of the 27% of the local market grabbed by predatory and unfair chicken imports at the cost of thousands of SA jobs, in an economy where unemployment and poverty are massive problems.

“Exports can be an important addition, but only once the industry has been stabilised and is growing again after more than a decade of relentless assault from predatory imports. Unfair trade practices have increasingly destroyed local jobs in a strategic SA agri-industry that underpins the country’s food security,” said Baird. 

phakathib@businesslive.co.za