FRANCOIS BAIRD: Don’t take the worst decision on chicken imports, Minister Patel

SA’s poultry producers are being hit hard by avian influenza (bird flu), and chicken imports will have to increase in the coming months to meet the needs of local consumers. 

How this is done is critical, and it looks like trade, industry & competition minister Ebrahim Patel is about to opt for the worst possible solution. It won’t solve the problems of retail prices and chicken supply but could cost thousands of SA jobs. 

Patel has ordered an “expedited” investigation in the possibility of rebating not only general import tariffs on chicken imports, but also on the anti-dumping duties that currently apply to nine countries. 

If he implements that plan a renewed and unrestricted flood of dumped chicken imports will threaten the survival of SA poultry producers. Poultry is a R60bn industry, the largest component of our agricultural economy and the biggest creator of agricultural jobs.

Our chicken farmers feed the nation. Chicken is the most popular and most affordable meat protein, accounting for 66% of the meat consumed in SA. Yet if Patel has his way chicken farmers, big and small, will go out of business, and thousands of jobs will be lost without discernible benefit to consumers. 

The industry is already in distress, losing billions of rand because of the fallout from load-shedding, high input prices and failing national and local infrastructure. Removing their hard-won gains against dumped chicken imports would be “the last straw”, in the words of the SA Poultry Association. 

Why would Patel destroy a strategic national industry when more sensible, and more practical, solutions are at hand? This is a national crisis, and decisions should not be taken unilaterally by any minister. Patel was the driving force behind the Poultry Sector Master Plan, which he signed in 2019 with the poultry industry, chicken importers and unions in the sector. 

Now is the time to get them all back together under the auspices of the master plan. Estimate the supply shortage in the months to come and agree on quotas of increased chicken imports to fill the gap. Those quotas would rise or fall depending on the ebb and flow of bird flu around the country. They would remain in place for as long as is necessary and fall away once bird flu abates and the situation returns to normal. 

This would make importers happy, because higher volumes would increase their profits, but it would not threaten the local industry. Imports would complement the local chicken supply, without imposing further stress on poultry producers and their workers. 

In addition, chicken producers and government could agree that SA, like other poultry-producing countries, compensates chicken farmers for the birds it orders them to cull to prevent the spread of bird flu. So far this year 7.5-million chickens have been culled, producers have lost millions of rand, but they have not been paid a cent for the loss of chickens and the disposal and cleanup costs. 

Now they will have to restock, also without help from a government that instead threatens their very existence by an unrestricted deluge of dumped chicken imports. At the FairPlay movement’s food security summit in Johannesburg on November 3, we will encourage the minister and all poultry participants to come together to make a better plan. 

A better plan should include another measure Patel and his colleagues could take. If government is serious about wanting lower chicken prices it would remove the 15% VAT from local chicken portions. This would immediately benefit consumers, particularly low-income households for whom chicken is the main source of meat protein. 

Opening the import floodgates is not going to resolve the minister’s pricing problem. In 2022 he thought that suspending new anti-dumping duties would keep prices down. He was wrong — chicken prices rose because of other factors such as load-shedding. 

Economics consultancy Genesis Analytics predicted that imposing the duties would have a minimal effect on retail prices. A similarly minimal effect is probable if those newly imposed anti-dumping duties are removed. 

There is a huge risk in the rebate path that Patel is contemplating. Not only would unrestricted imports threaten the collapse of the local poultry industry, but its demise would be followed by skyrocketing chicken prices because importers and foreign producers could charge whatever they like. 

Ghana provides a frightening example. When Ghana allowed duty-free chicken imports they quickly destroyed the local industry. Local production went down from 95% of the market to 5%, and chicken in Ghana became more expensive. Now Ghana has embarked on a lengthy and expensive plan to revive its domestic chicken industry. We must not let that happen here. 

FairPlay is not opposed to imports. They are essential for any market and, when fairly priced, provide local producers with necessary competition. However, that trade must take place within World Trade Organisation rules. Dumping is not fair trade, it is a violation of the rules of international trade and the WTO says it must not be allowed. 

Patel has a duty of care to SA consumers and workers, and to the SA poultry industry, including chicken importers. He should do the right thing for the people of SA rather than a quick thing that would be a disaster for the country.

Baird is founder of the FairPlay movement.