Picture: 123RF/ANDOR BUJDOSO
Picture: 123RF/ANDOR BUJDOSO

The new higher tariffs on chicken imports will push up the price of chicken but will not stop the imports, an organisation representing emerging black importers and exporters says.

On the other hand, an organisation that aims to fight predatory trade practices and dumping says the new tariffs may not be enough to get the struggling poultry sector back on its feet.

On Friday, the government gazetted increases to 62% on bone-in chicken portions, and to 42% on boneless portions. The SA poultry industry had applied for an 82% tariff on both categories, up from existing levels of 37% and 12%, respectively.

SA’s poultry sector has shed thousands of jobs and blames its demise on 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 in the local poultry industry for its woes.

The Emerging Black Importers and Exporters Association (EBieSA) complained that the large, historically advantaged local poultry producers had been given further protection at the expense of emerging black importers. The tariff hike would also have a negative effect on cash-strapped consumers, EBieSA said. It estimated that a 2kg bag of frozen bone-in chicken would rise from R129 to R162.25 after the tariff and a 5kg bag from R174.95 to R224.99.

“The country is officially in recession, and consumers and small business owners need all the help they can get. Why ramp up the tariff so substantially?” EBieSA chair Unati Speirs said.

“The local poultry industry is the problem, not the importers. SA produces 70% of local demand for chicken, and imports make up the other 30% which the local industry cannot produce. Chicken is the largest and most affordable source of protein in SA but local producers have not expanded production, despite the fact the tariffs were already in place. Instead of investing in local production, the poultry industry just asks for more protection.”

Francois Baird, the founder of FairPlay, said on Friday that the higher tariffs on predatory chicken imports from Brazil may well reduce importers’ profits, but whether they will stem the tide of predatory trade and dumped chicken swamping SA shores remains to be seen.

 “This is the first test of the poultry industry master plan signed at the end of last year. One of the plan’s objectives was to ‘contain’ imports so that the industry could recover, grow and create jobs,” Baird said.

“To succeed, these new tariffs on chicken imported from Brazil, as well as earlier, higher duties on chicken imports from the EU, must prove to be sufficient to halt the surge of predatory imports and prevent further job losses, mostly in impoverished rural areas.

“FairPlay hopes this will be the case, but a steady rise in dumped EU imports after the lifting of bird flu bans suggests that further action will be necessary.”

Real protection needed

Chicken imports doubled from 2010-2018, discouraging investment in expansion and job creation. Baird said that because protection has been inadequate, most of the increase in demand for chicken in recent years has been gobbled up by predatory imports at the expense of small-scale farmers and their workers.

“The SA chicken industry is in trouble because imports have grabbed nearly 30% of the local market. Real protection for the local industry, and a spur to job creation, would be to limit imports to 10% of local sales. Restrictions in the EU have kept chicken imports in that region to about 7%, so a sharp cutback here would be possible.”

Earlier in March, the SA National Consumer Union (Sancu), which advocates for consumer interests, urged the government to consider other measures to assist the embattled poultry industry instead of hiking tariffs on chicken imports.

It said hiking tariffs invariably results in price increases across the board as local producers cash in on the reduced competition. /With Linda Ensor

phakathib@businesslive.co.za

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