SA already has one of the most protected poultry industries in the world
The industry needs help but not protection: imports are not harming the local industry, and tariffs or anti-dumping duties are not the way to solve the problems
Not even a year after the introduction of significant increases to already-hefty poultry import tariffs, SA’s International Trade Administration Commission (Itac) has announced that it is launching an antidumping investigation at the behest of the SA Poultry Association (Sapa), against Ireland, Spain, Poland, Denmark and Brazil.
While all countries have the sovereign right to investigate dumping allegations, they must be rooted in two fundamental values: fairness and accuracy. This is critical, as without these values consumers could end up paying more for chicken and SA could run the risk of running foul of its bilateral relations with strategic trade partners. Critically, these are partners we rely on for our own exports.
For many years now, five mega domestic poultry producers have continued to advocate for protectionist policy. This includes launching campaigns to increase tariff protection and accusing countries of dumping — without any viable evidence or proof.
The real question is why the local poultry industry continues to pursue protectionism despite the unintended consequences: most notably the increase in the price of poultry for cash-strapped consumers.
SA already has one of the most protected poultry industries in the world. Imports account for about 20% of all chicken consumption in SA, the bulk of which is product SA farmers cannot and do not produce, but which are critical to feeding the nation.
SA’s chicken producers claim to be the most sophisticated agricultural sector on the African continent, but they are one of the only two agricultural producers that consistently ask for import tariff protection, with the excuse that they can only remain viable if further protected.
Almost all other agricultural sectors in SA have the same challenges: drought, diseases, high input costs, seasonal demand, fluctuations in the exchange rate, competition from imports, and a lack of development in the emerging sectors. Why, then, when the rest of SA’s agricultural industry is doing relatively well, is the poultry sector insisting that it cannot survive without government protection?
The answer perhaps lies in the one unique aspect of the country’s poultry industry: supply is completely dominated by these five mega producers. These companies control almost the entire market (75%); dominate any discussions about the future of the chicken industry; and lead and fund Sapa, which has applied for antidumping duties to be levied.
The Poultry Master Plan, adopted in 2019, seeks to support local producers by helping facilitate a thriving export market for SA chicken. The government recognises that by driving exports local producers will be able to create more jobs. The local market is not a fledgling industry, it is well-established and already entrenched as the dominant player. Despite this, only one producer is exporting to only one ex-Africa country, Dubai. Contrary to the intention of the master plan, Astral’s CEO recently made it clear that no-one wants to import SA poultry, blaming concerns about local poultry diseases, brining and other phytosanitary issues.
The Association of Meat Importers and Exporters (AMIE) was invited to be part of the panel participating in this master plan, as we represent the import and export market. We will do whatever we can to help with implementation of the four key pillars, but the master plan is not intended to act as a protection mechanism for the five mega producers.
On balance, we welcome Itac’s investigation into Sapa’s claims of dumping in SA as we feel this will lay the issue to rest once and for all. We have little doubt that the investigation will not find evidence of dumping, and we hope fairness and accuracy will then prevail.
The industry needs help, but not protection. We do not believe imports are harming the local industry, and we do not believe tariffs or antidumping duties are the way to solve the industry’s problems.
Tariffs are hugely inflationary, as shown by the price of chicken meat, which has outstripped inflation for the years in which they were introduced. As usual, it is the lower LSM consumer who suffers most from price increases brought on by increased tariffs.
Excessive tariffs also cause reputational damage to the SA industry, as the type of punitive tariff being requested by the large producers are seen as hostile to reciprocal trade.
There seems to be a resistance to expanding the export market, citing food safety and brining as major factors. This is where government intervention could help by upgrading safety regulations and facilitating trade relations. There also appears to be a lack of co-ordination in industry bodies, another area where government could assist.
Twenty years ago Brazil was where SA is now. But a combination of government support, huge investment in operational efficiency and galvanising an entire industry from mega producer to small-scale farmer around a singular focus of becoming the world’s food basket, has positioned Brazil as the second-largest producer and largest exporter of poultry in the world.
At the end of the day, we all have to be focused on our purpose, which should be to ensure SA consumers have access to quality, affordable protein. If after 80 years in business local producers are still unable to produce enough chicken to supply local consumption, and have still not made any inroads into expanding their footprint to the export market, will they ever get this right?
• Matthew is AMIE CEO.
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