More corrections expected in poultry anti-dumping duties

Since imposing provisional antidumping duties on chicken imports from Brazil and four EU countries in December, SA’s International Trade Administration Commission (Itac) has made two corrections to the duty schedule and it is likely that further changes will made to the provisional determination, which is valid until June 14, before a final determination is announced. 

The anti-dumping duties apply to each country and also to individual companies in Brazil, Denmark, Ireland, Poland and Spain. Companies in these countries that did not make their own submissions to Itac are subject to the general country duty which was set at 265% for imports from Brazil, 67% for Denmark, 158% for Ireland, 97% for Poland and 85% for Spain.

The provisional duties, that are supposed to protect local producers from poultry imports that can be brought into SA at prices lower than their domestic selling prices, apply to bone-in chicken imports (drumsticks, thighs, and leg quarters) from the four EU exporters, while the provisional duties for Brazil apply to bone-in chicken portions as well as chicken breast meat.

Corrections made since the duties were imposed in December were for individual companies and not for the general country duties, said Izaak Breitenbach, GM of the SA Poultry Association’s broiler organisation.

According to Breitenbach, their application for the anti-dumping duties was lodged in February 2021.

The provisional duties were imposed after Itac found, based on evidence presented, that dumped poultry imports from the five countries increased in volume in absolute terms relative to local consumption and production during the period July 2018 to June 2019.  

The commission also determined that the dumping had caused material injury to the local industry and that there was a causal link between the dumping of poultry and material injury to the local poultry industry.

“Profitability in the poultry industry has been under pressure for the last few years due to dumping and this has limited investment by producers, resulting in little growth across the industry,” said Breitenbach.

Astral, the largest integrated poultry producer in SA, said that the poultry industry has been plagued for many years by the negative effect of the dumping of chicken into the local market, but more recently the industry has seen some growth.

As part of its “pledge” towards the Poultry Industry Master Plan, Astral commissioned an investment in new production capacity in 2020 which has already delivered some volume growth.

Astral’s earnings per share and headline earnings per share for the six months ending March 31 2022 were expected to be up by at least 100% on the comparative six month period in 2021, the company said in a recent trading update.

This recovery was achieved, albeit from a low base, mainly through increased poultry sales volumes and improved net selling prices.

The impact of the provisional anti-dumping duties implemented in December is yet to be seen through the trade statistics, so it is too early to comment on their impact, Astral told Business Day. However, there was also the increase in the most-favoured nation duty on frozen bone-in portions and boneless cuts that was imposed in March 2020 to consider.

Total poultry imports for 2021 reduced by about 12% from 2020. “This cannot all be attributed to the impact of the duties implemented though it is feasible that the increase in the tariffs have played a role,” the company said.

The Association of Meat Importers & Exporters (AMIE), which opposes the anti-dumping duties, believes that the poultry association’s application was flawed and that there was no clear evidence of material injury to the local industry due to dumping.

Based on their assumption of a lack of evidence, Paul Matthew, CEO of AMIE, said they predicted more corrections would be made to the provisional determination and that the general country duties imposed by the final determination would be lower than the current rates.

According to AIME total chicken imports (excluding mechanically separated meat) for December 2021 decreased by 17% compared with December 2020, and imports of bone-in chicken cuts were down 34%.

Trade protections that hampered poultry imports could result in an increase in the retail price of chicken, Matthew said. “I believe local poultry producers are at risk of pricing themselves out of the market. We may see consumers switching to other products such as pork, as chicken becomes too expensive for low-income earners. The price for whole birds has already increased by 16%,” he said.

Breitenbach argued, however, that price increases were not a result of tariffs, but rather due to the significant increase in poultry feed prices — an input that accounts for 65% of production costs.

erasmusd@businesslive.co.za