LETTER: Not counterintuitive, just wrong

The Competition Commission has calculated that for several months in 2022 the import price of chicken was higher than it was selling for in SA’s retail shops (“Competition watchdog sparks outcry over food price hikes criticism”, March 29).

This nonsense (the commission calls it “counterintuitive”) illustrates my concerns about aspects of the commission’s report on the effect of chicken imports on retail prices, including the effects of the imposition and removal of provisional anti-dumping duties in 2022.

From December 2021 to July 2022 the government imposed provisional anti-dumping duties on chicken imports from Brazil. These ranged from 6% to 48% on six named producers, and was set at 265.1% for all other companies. There were similar ranges for four EU countries.

However, as the commission had no way of knowing which tariffs applied to which import consignment, it says in a footnote that it applied the maximum tariff to all imports for the purposes of its calculations. This results in a graph showing import prices, including duties, exceeding retail prices. Worse, it results in conclusions based on that incorrect assumption.

Other anomalies caught my layman’s eye:

• The report says EU imports were banned in March 2022. In fact, spreading bird flu outbreaks resulted in various EU countries being banned over several months, culminating in a ban on Spanish chicken from January 2022.
• Because it can find no other explanation, it sees a potential link between the EU ban and a simultaneous rise in producer price of SA chicken from March 2022. Its “further interrogation” might suggest a more likely answer — the effect on feed and other input prices of the war in Ukraine after Russia’s invasion the previous month. In its introduction, the commission diplomatically calls the invasion “the Eastern European conflict”.
• The report wrongly states that when EU imports were banned, Brazil was left as the only source of SA chicken imports. What about the US and Argentina, second and third on the imports list? The US is now the main source of bone-in chicken imports into SA.
• It wrongly says chicken imports from the US are subject to a quota “in addition to an anti-dumping tariff of 940c/kg in place since April 2012”. In fact, the US quota is specifically free of the anti-dumping duty, which has been in place since 2000. It is a concession, not a penalty.

I’m sure there are other errors and omissions that experts will detect. I have seen enough to make me suspect that what should have been a worthwhile investigation to the benefit of SA consumers may end up punishing the wrong people for the wrong reasons.

Francois Baird
Founder, FairPlay

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