As a retired former CEO of the Association of Meat Importers & Exporters, I would like to comment on Bekezela Phakathi’s report on poultry tariffs (“Calls for suspension of poultry tariffs to cushion consumers”, April 11).
The report quotes a variety of interested parties — importers, local poultry producers, and XA International Trade Advisors, arguably the leading trade economists in SA.
I find importers’ suggestion of suspending tariffs to be naive, totally impractical and fiscally unaffordable, but I like their suggestion of a three-year moratorium on new tariffs and the zero rating of VAT.
I believe the VAT issue was first raised by local poultry producers, but their latest plea to the government is manipulative as it is restricted to fresh and frozen whole chicken as well as (individually quick-frozen) packs. These products represent about 80% of local poultry sales.
The manipulation here is the exclusion of frozen bone-in cuts, which have formed the basis of years of tariff applications against importers. The plea is therefore also an attempt to provide local poultry producers with a further substantial price advantage.
The SA Poultry Association maintains that “cheap imports have led to colossal job losses”. However, based upon every set of recent financials of major local poultry players, I have found no evidence of this or of their claim that tariffs have led to job creation. This is substantiated by Donald MacKay, founder and CEO of XA.
There will be unavoidable price increases due to a huge rise in the cost of feed, which makes up 70% of the cost of producing a chicken, as well as electricity blackouts, fuel increases and other inflationary costs.
With this in mind, it would be in consumers’ interests to abandon or suspend the current tariff investigation into imported chicken (now in its final phase — high provisional tariffs have already been introduced).
If implemented, this investigation, with its numerous errors, will result in huge tariff increases. Consumers should be made aware that every successful tariff application I was involved in resulted in price increases, despite assurances to the contrary.
The one investigation that was referred to the World Trade Organization was rejected due to it being flawed. That should be food for thought for hard-pressed chicken consumers, many of them poor and unemployed.
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