Mistruths abound as there is no poultry dumping in SA
Imports make up less than 20% of total consumption and trade partners are not selling their products at a cheaper rate
I am continually dismayed by the constant misinformation about poultry imports in SA, specifically where it concerns dumping or predatory trade. Consumers are faced by a barrage of fake news from the local poultry industry and its allies, all presented as fact and cloaked in the illusory garb of being in the best interests of SA and the public. There is not one shred of truth to these insinuations.
Trade, by its very nature, is reciprocal, so to attack trading partner countries that also procure a vast basket of goods and services from SA is dangerous and in direct opposition to the strong message of welcome our president gave global investors at the recent investment conference.
One of the most persistent and endlessly repeated mistruths is that large quantities of poultry products are “dumped” in this country. Dumping is when one country sells similar products abroad at a cheaper rate than in its domestic market. There are no SA trade partners that are selling their poultry product in SA below this cost.
A well-known tactic of purveyors of propaganda and fake news is to build a false narrative around verifiable facts. The domestic poultry industry has made much of the fact that imports have increased since the beginning of the lockdown. This may be true in part because demand plummeted on the back of the lockdown, and then increased again as the country opened up, but overall it is not true. Statistics show that poultry imports this year declined by 15.3%.
They will also conveniently add mechanically deboned meat to inflate poultry import statistics and bolster their import growth narrative. But this is misguided. Mechanically deboned meat is not produced to scale in SA and has to be imported because it is critical to the production of cold cuts, viennas and so forth, and contributes substantially to the protein intake of many of SA’s poorer consumers.
Now the industry is calling for the introduction of limits on the amount of poultry imported into SA. If imports are to be reduced or restricted by law we in effect remove the competitive nature of the local market, all to the detriment of the already cash-strapped consumers.
Local producers in Botswana, for example, were successful in their attempts to close the market to imports. Without the tempering role of imports, the price of chicken skyrocketed and today affordable chicken from SA is smuggled across the border into Botswana to meet the demands of people desperate for access to reasonably priced chicken.
Calls by our domestic producers for increased pricing can already be seen in SA. This is despite their commitment to the trade, industry & competition minister during discussions leading up to the adoption of the poultry master plan that local producers would not increase the price of chicken. This week the CEO of Astral said it would have to push through a price increase of up to R2/kg on frozen chicken, a 10% price increase on a basic consumer staple.
The preservation of jobs is critical, especially in the current economic climate. But so is maintaining chicken affordability for SA’s people. One of the key focus areas in the department of trade, industry & competition’s poultry master plan is to encourage domestic producers to drive efficiencies and increase its own export capability. In doing so the domestic industry will be geared for growth, able to create and sustain jobs and create value for shareholders.
From a trade perspective, the SA poultry industry is already one of the most protected in the world. Last year the SA Poultry Association applied for an 82% ad valorem import tariff on bone-in and boneless frozen chicken from many non-EU countries, including the US and Brazil. In March 2020 the SA government granted a tariff of 62% on frozen bone-in chicken portions (up from 37%) and 42% for frozen boneless portions (up from 12%).
Such high tariffs go beyond levelling the playing fields and border on extreme protectionism, which allows large local producers to hike their profits while smaller, mainly emerging producers get shut out of the market.
Consumers bear the brunt of protectionism by paying more for chicken. According to the National Agricultural Marketing Council, the price of chicken has increased 7.8% over the past year. This increase, according to the council’s chief agricultural economist, Sifiso Ntombela, is due to a weakening in the exchange rate just before the start of lockdown and the increased import tariffs gazetted in March.
The domestic industry’s strategy, which is to close the market to imports, which are less than 20% of total consumption, is counterintuitive and destructive and will only lead to higher prices for consumers, drive a rift between SA and its key trade partners, and further consolidate an already oligopolistic industry. As with all things, balance is required, not only in terms of trade relations but also in the inflated rhetoric that continues to damage this industry.
• Matthew is CEO of the Association of Meat Importers & Exporters.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.