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

As the coronavirus wreaks havoc across the globe threatening trade and supply chains, a war of words has erupted between poultry importers and local producers about the effect of the latest hike in poultry tariffs.

The poultry sector is strategically important to SA as a source of employment and agricultural production, and the state has moved to protect it from “unfair competition”. 

Earlier in March, the government gazetted tariff increases to 62% on bone-in chicken portions while tariffs on boneless portions were raised to 42%. The SA poultry industry was pushing for an 82% tariff on both categories, up from 37% and 12% respectively.

Thousands of jobs have been lost in SA’s poultry sector in recent years, with local players blaming cheap chicken imports from Brazil, the US and Europe. But SA meat importers blame it on the lack of competitiveness in the local poultry industry.

Last week, the Association of Meat Importers and Exporters (Amie) said cash-strapped consumers are likely to pay about R4/kg  more for chicken. This will hurt many locals since chicken is generally regarded as one of the most affordable and important protein sources.

The association warned that the economy will suffer as there will be big job losses in the food commodities and associated industries. “[This] at a time when SA is in recession and we are now fighting the coronavirus [outbreak] and still have to see the effect it has on world trade; this is an extremely short-sighted decision,” Amie CEO Paul Matthew said then.

The SA Poultry Association (Sapa), which represents local producers, said at the weekend it is concerned about what it called misrepresentations regarding the potential price impact of higher import tariffs. The assertion that a tariff increase on certain categories of chicken imports will increase the price of all imported chicken and locally produced chicken is misleading, it said.

Dropped prices

“The tariffs apply to the landed cost of chicken from the countries affected by the increased tariffs, mainly Brazil, and will not automatically result in retail price increases, even on the imported portions affected by the tariffs,” Sapa’s Izaak Breitenbach said.

He said the evidence, as supported by the Genesis report [a recent independent research report on the sector] on the potential price impact of duties, shows that in the past, exporting countries, including Brazil, have dropped their export prices to counter higher tariffs.

“The tariff increases should assist in bringing the landed cost of chicken from Brazil closer to the production price of locally produced chicken, not ignoring any potential reaction from these countries as described above. As set out in a study by the Bureau of Food and Agricultural Policy, tariffs have historically been a necessary element in addressing unfair trade, including dumping,” Breitenbach said.

He added that the tariffs do not affect locally produced chicken. More than 70% of chicken consumed locally is produced in SA, Breitenbach said.

“The new tariffs do not affect all imported chicken. They only affect just over 30% of all imported chicken, with imported chicken making up about 30% of local consumption. The EU, a major producer and exporter to SA, is not included in this tariff.”

Claims that the tariff hike will lead to “significant job losses” and that the “economy will suffer” are unfounded, Breitenbach said.

“The tariffs are the result of exhaustive negotiations during the development of the groundbreaking Poultry Sector Master Plan, and was endorsed and approved by all the signatories, including the minister of trade, industry & competition, the minister of agriculture, land reform and rural development, the poultry industry, importers and trade unions.

“Tariffs were acknowledged to be a key aspect of the plan by all stakeholders. The master plan specifically aims to curtail imports to allow the local industry to stabilise, expand and create jobs,” Breitenbach said.

phakathib@businesslive.co.za