Chicken dumping in SA

Many local chicken producers have been forced to close farms and retrench staff, due to increasing levels of predatory imports.

South Africa’s poultry industry has experienced a 400% surge in chicken imports over the past two decades. This jeopardises the country’s food security and negatively impacts on job creation and economic growth.

It is believed that a large percentage of these imports are predatory – dumped below the cost of production. This overview provides a short introduction to, and history of, the scourge of dumping and predatory trade in South Africa’s poultry industry.

Jump to the following sections:

1 / A brief history of chicken imports and why tariffs are needed.

2 / The rapid rise in predatory chicken imports from Brazil.

3 / The SA Poultry Association’s most recent application for a tariff increase.

4 / The impact of agricultural subsidies on imports.

5 / Bulk pack imports and food safety concerns.

6 / Food safety scandals by Brazilian producers.

7 / Urgent actions we can take to save SA’s chicken industry.

8 / The Poultry Industry Master Plan.

9 / Notes: Why these steps are not anti-competitive nor protectionist.

10 / Notes: An introduction to duties and tariffs.

1 / A brief history of chicken imports and why tariffs are needed

Lionel Adendorf of FairPlay and Inés Godinez Aguirre de Cárcer, Trade Advisor to the Delegation of the European Union to SA. 2019.

Brazil and the EU have become a major threat to the South African chicken industry, and by extension the grain industry which supplies huge volumes of poultry feed. They are a threat to the Southern African region, where the poultry industry is a major employer and a significant contributor to local economies and food security.

Poultry imports from Brazil have been climbing steadily in recent years. Official import statistics from the SA Revenue Service show that in 2017 South Africa imported 524 000 tonnes of chicken, worth R5.9 billion. By 2018 this had risen to 539 000 tons, worth more than R6 billion. In both years, more than 60% came from Brazil, which is world’s largest exporter of chicken meat. 

South Africans consume some 25 million chickens per week. Of this, 19 million come from local producers. The balance – equivalent to 6 million chickens per week – is imported. Imports make up nearly a quarter of local consumption, and exceed the output of any local chicken producer.

South African imports rose to 30% of the local market (including mechanically deboned meat or MDM) and 20% (excluding MDM), thanks to a predatory onslaught led first by the European Union and then by Brazil as EU imports declined because of bird flu bans.

Chicken imports reached a record high in 2018, when 566 000 tonnes was imported at a cost of R6.1 billion. Imports in 2019 were 5.5% higher than the five-year average from 2013-2017.

This is poultry that could and should be produced in South Africa, in local facilities creating local jobs. Instead, local production is being squeezed and jobs are being lost. Chicken is South Africa’s cheapest and most popular form of animal protein, and demand is rising. However, increased demand is being taken up by imports, and local producers are suffering as importers grab market share.

This is why the SA Poultry Association recently applied for an 82% ad valorem import tariff on bone-in and boneless frozen chicken from many non-EU countries, including Brazil.

Safeguard duties were approved against all EU countries in 2018. The rate was set at 35.3%, reducing to 30% in March 2019, 25% in March 2020 and 15% in March 2021. It falls away entirely in March 2022.

In 2020 the South African government granted tariffs of 62% for frozen bone-in chicken portions (up from 37%) and 42% for frozen boneless portions (up from 12%). These tariffs apply to non-EU countries such as Brazil, the US and Argentina.

This action taken by the South African government implies the recognition of predatory and unfair trade in the importation of chicken to South Africa.

Imports have declined in 2020, due to a combination of higher tariffs, the impact of Covid-19 and exchange rate changes. The EU share of chicken imports into South Africa is rising steadily as exports recover.

2 / The rapid rise in predatory chicken imports from Brazil

Produced by economist Mike Schussler, courtesy of economists.co.za

The focus is on Brazil because it has supplanted the EU as the major source of dumped chicken imports into South Africa. Up to 2016, the EU dominated imports, particularly of the frozen portions which account for nearly 60% of the South African imported chicken market.

Then EU imports were halted by outbreaks of bird flu at the end of 2016, and have not yet recovered. However, Brazil quickly stepped up supplies and as a result total chicken imports registered only a slight dip in 2017. Brazilian poultry imports rose by 50% in the two years after the EU ban, more than filling the gap left by EU producers. 

Poultry imports, mostly chicken, reached a new record high in 2018, led by this huge increase in supplies of frozen chicken from Brazil.

The increase is illustrated by imports of frozen bone-in chicken portions, the popular cuts including leg quarters and the market segment where imports have done most damage to South African producers and local jobs. EU countries had for years dominated these imports, accounting for up to 90% of bone-in chicken imports before the bird flu bans at the end of 2016. By 2018 the EU contribution had dropped to 18% of total bone-in imports worth R3,85 billion.

In December 2016, when EU bird flu restrictions took effect, Brazilian imports comprised just 2.9 % bone-in chicken portions. Four years later, in December 2018, this figure had risen to 27.4 % (from a high of 46.5 % in February 2018). 

Poultry imports from Brazil have doubled since 2014, rising from 15 000 tonnes a month in October 2014 to 30 000 tonnes in October 2018. In some months in both 2017 and 2018, imports reached 35 000 tonnes.

By December 2017, Brazilian poultry imports were 44% higher than the previous year, rising a further 6% in 2018. In the first half of 2018, Brazil accounted for 63% of South Africa’s poultry imports. By October 2018 this had topped 64%, dropping slightly to 61,5% for 2018 as a whole.

3 / The SA Poultry Association’s most recent application for a tariff increase

International trade statistics published on the UN Comtrade database show that Brazil prices its chicken exports differently for various markets. As prices for South Africa are lower than for nearly every other country, South Africa is clearly being targeted. 

Unfortunately for the South African consumer, low import prices are not passed on to the consumer. Imported chicken is sold at just below the price of local chicken, ensuring market share growth and substantial profits for importers and middlemen.

Brazil and the United States castigated South Africa for the imposition of import tariffs, and warned of dire consequences for South African consumers, including the false claim that the retail price of chicken will skyrocket as soon as tariffs were imposed.  The facts speak for themselves – tariffs have been in effect for months and there has been no commensurate rise in the retail price of imported chicken.

The decision to impose tariffs of 62% for frozen bone-in chicken portions (up from 37%) and 42% for frozen boneless portions (up from 12%) on imports from non-EU countries was made by the International Trade Administration Commission (ITAC), the government body that oversees the application of tariffs and duties.

Central to their deliberations was the degree to which Brazil, as the major source of chicken imports, continues to harm the local and regional markets, causing job losses or preventing local expansion. The arguments and statistics produced by the SA Poultry Association (SAPA) in support of its tariff application showed the impact of the unrelenting flood of imports on local producers.

The tariff application stated that the SACU poultry industry faces enormous profitability challenges because of “increasing volumes of opportunistic imports” of frozen chicken which significantly undercut the SACU industry. The result has been “serious injury” to local poultry producers, including downsizing and job losses, and a deterioration in SACU’s food security position.

The result has been production cutbacks and decreased capacity utilisation which denies producers the opportunity to achieve economies of scale, and thus improve efficiency and profitability. It also risks further job losses.

It is hoped that additional duties would reduce imports, allow the local chicken industry to increase production volumes and improve capacity utilisation, improving profitability and ensuring the sustainability of their operations, the application states.

Dismissing these arguments, the Brazilians say the main reason for the South African industry’s problems has been the impact of bird flu since 2017. In fact, there has been no bird flu in South Africa since 2017 and South African producers would be able to replace most of the imports with local chicken.

Local producers have invested significantly in plant, machinery and buildings to improve capacity and efficiency. However, the under-utilisation of production capacity means “reducing profits, losses and diminishing returns”. Without significant tariff protection, import volumes and the consequent damage to the industry will increase, and industry investment will continue to drop off.

Furthermore, the South African poultry industry is a major economic contributor to the region:

1.The SACU poultry industry (meat and eggs) supplies more than 60% of the animal protein consumed in SACU and makes up almost 20% of South Africa’s agricultural gross domestic product. 

2. It is the single largest part of agriculture in SACU and is core to SACU food security. 

3. The poultry industry is the second biggest user of maize in the region and by far the biggest user of soybeans. The South African government’s soybean development strategy is dependent on the success of the local poultry industry.

4. The SACU domestic broiler industry directly employs at least 47,025 people with a further 58,383 people indirectly employed in support industries that are dependent on the broiler industry. The crops which are used as feed in the poultry industry account for approximately 17,738 workers in the crop farming sector.

The tariff application focused on the technical requirements and supporting data for such an application. It did not single out Brazil, as the tariffs affect all regions except the EU and SADC countries.

However, the steadily rising volume of chicken imports from Brazil is addressed in detail in SAPA’s monthly import reports based on SARS verified statistics. These are available on the SAPA website (www.sapoultry.co.za).

4 / The impact of agricultural subsidies on imports

Since 2006, the EU allocated around €54 billion per year of public funds to the Common Agricultural Policy (CAP).

Claims by the EU that subsidies have no impact on chicken exports to South Africa are both inaccurate and misleading.

The EU annually provides nearly 80 billion Euros in agricultural subsidies to producers in Europe, including chicken producers. In fact nearly 20 percent of farm income in Europe is derived from subsidies under the EU’s Common Agricultural Policy (CAP).


The largest single expenditure in the EU budget is support for agriculture. Around 39 percent of the EU budget is spent on agriculture, with about 30 percent going directly to farmers and the agricultural market.


These subsidies are not tied to production levels. This means that massive unconditional subsidies to European producers under the CAP make dumping of surplus chicken into South Africa below the cost of production all the more financially viable.

The Brazilian attack on the South African chicken market has been facilitated primarily by two factors – years of substantial agricultural subsidies which have turned Brazil into a large and low-cost producer, and the northern hemisphere’s preference for white meat, which sells at a premium and enables the dumping of the leftover brown meat (legs and thighs) which are popular in South Africa.

Unlike South Africa, the Brazilian government has steadily subsidised its agricultural industry, enabling the country to become a leading producer and exporter of poultry, beef, sugar, soyabeans and coffee. In April 2018 the Brazilian government announced it was increasing a subsidised agricultural loan programme to $58bn for the 2018/19 season.

Like their EU counterparts, Brazilian poultry producers make their profits from high-priced white chicken breast meat. This leaves them with a surplus of unwanted brown meat – drumsticks and thighs – which they sell in frozen bulk packs to any market that will take them.

5 / Bulk pack imports and food safety concerns

Chicken which contravene packaging and labelling regulations photographed in a local supermarket.

The South African chicken industry has long campaigned against bulk pack imports, which avoid the detailed labelling and traceability required of South African producers, and consequently are a potential health hazard.

The two issues are linked. Frozen bulk packs are thawed and broken up into smaller packs for distribution in the local market. Thawing and handling introduce health risks and, while major companies take great care to minimise these dangers, some smaller or unscrupulous operators are less hygienic, putting public safety at risk.

South African chicken products all carry detailed labels so that, in the event of contamination, the product can be traced back to the farm that produced it and the feed it was fed. After extensive protests by FairPlay and others, an exemption that allowed imported chicken to be labelled vaguely as coming from any one of several countries is being phased out.

6 / Food safety scandals by Brazilian producers

The regulatory discrepancies described above are particularly important in the case of Brazil, which has been hit by food safety scandals. Revelations in 2017 of bribery and corruption related to food safety inspections led a number of countries to enforce temporary bans on Brazilian meat and chicken imports.

Brazilian food safety issues continued in 2019, salmonella contamination leading to the recall of a batch of chicken destined for local and export markets. Saudi Arabia blocked imports from five Brazilian producers for “technical” reasons believed to be salmonella-related, and EU countries banned 20 Brazilian producers because of salmonella issues.

The EU has a zero-tolerance approach to salmonella, bacteria which cause a form of food poisoning that can be fatal.

Concerns about food safety in Brazil led to the SA Poultry Association calling for a ban on all Brazilian chicken imports until these safety issues have been resolved. The issue also highlights the need for all frozen chicken sold in South Africa to carry labels enabling authorities to trace it back to source in the event of a public health scare.

During the coronavirus outbreak in July 2020, the Chinese government asked Brazil to halt exports from two Brazilian meat plants, one of them a poultry producer.

7 / Urgent actions we can take to save SA’s chicken industry

Saving the South African chicken industry from the serious impact of dumped chicken and predatory imports requires four immediate steps:

1.An investigation into chicken dumping in South Africa, and following this investigation, the application of urgent anti-dumping duties. China has already imposed anti-dumping duties against Brazilian chicken. The South African Poultry Association (SAPA) has announced that it is preparing anti-dumping applications against Brazil and four additional EU countries, which it has not named.

2.Regulations requiring all imported chicken to be labelled according to the same standards applied to local chicken. 

3.A ban on bulk pack imports, with all imports packed at source for South African customers.

8 / The Poultry Industry Master Plan. 

The Poultry Sector Master Plan, agreed at the end of 2019 by government, the local chicken industry, unions and chicken importers, specifically calls for reduced imports and for action against unfair trade, including dumping.
It notes that chicken imports had increased 400% over the past 20 years, that potential production growth had been displaced by imports and that the market share of South African producers has declined.


“As a result our industry is now vulnerable and faces significant threats to our existing capacity,” the master plan says. “Imports of broiler meat (excluding MDM) have increased 73% over five years. “If this trend is not reversed, then the South African industry can be expected to stagnate and slowly decline, affecting jobs and livelihoods across the value chain from maize and soya farming to food processing. It would also threaten our food security in the longer term.”


Under “Strategic Objectives”, the master plan says South Africa needs to grow the poultry sector for both local and export production and to protect against potential loss of capacity. “We need to expand our poultry sector and avoid losing local capacity. Our aim is therefore to contain imports. In addition, we should act decisively against unfair forms of trade and any attempts to dump products in our market,” the master plan states.

9 / Notes: Why these steps are not anti-competitive nor protectionist. 

They are required, in terms of local and international trade law, to provide a level playing field where all countries can compete on equal terms.

South African chicken producers are among the most efficient in the world, producing chickens cheaper than most countries, including all EU countries. They would compete effectively against all imports, including subsidised EU and Brazilian imports, provided steps are taken to counter the unfair advantage resulting from subsidies and the unequal impact of various regulations.

At stake is the survival of the Southern African chicken industry and the jobs of tens of thousands of workers in the region’s poultry and grain industries. Brazil and the EU are the core of this existential threat.

10 / Introduction to duties and tariffs. 

The World Trade Organisation, which sets the rules on fair trade, says countries are entitled to charge additional import duties to compensate for damage caused by unfair trade.

These mainly fall into three categories:

1.Actions taken against dumping.
2.Countervailing duties to offset trade-distorting subsidies.
3.Safeguard duties to counter an imports surge and protect domestic industries.

Countries can also adjust the general tariffs that they charge all countries except those with whom they share preferential trading blocs. These are known as Most Favoured Nation or MFN tariffs. In South Africa’s case, its MFN tariffs do not apply to its neighbours in the Southern African Customs Union (SACU) or to the EU, with which it has duty-free trade agreements.

Anti-dumping duties, MFN tariffs and safeguard duties are all in force against a number of South Africa’s trading partners.

Anti-dumping duties

In addition to saying that dumping is “selling at an unfairly low price”, the WTO also says that dumping is “exporting at below cost to gain market share”. That is predatory trade, and it has devastated the chicken industry in South Africa. It also threatens others industries such as steel, textiles, dairy and cement.

Selling below production cost is one measure of dumping. More usually it is expressed as a “dumping margin” – the difference between the price goods are sold for in a target country and the price charged in the producer’s home country, or in third countries. This difference is expressed as a percentage – if goods are landed in South African for R10 when they are sold in the home country for R20, the dumping margin is 100%. Incoming goods in the specified category would then be subject at the port of entry to 100% anti-dumping duties, or whatever other rate is approved

Industries applying for anti-dumping duties must produce the evidence on which they calculate the dumping margin. They must also show that “material harm” has been caused to the industry, or is likely to be caused if dumping continues. Applications are open for public comment and the dumping margin, or the claim that dumping is happening, can be contested.

In South Africa, applications are considered by the trade regulation body the International Trade Administration Commission (ITAC) which then submits a recommendation to the government. The final decision is made by the Minister of Trade, Industry and Competition after consultation with the Treasury.

South Africa currently has anti-dumping duties in place against four countries exporting frozen chicken portions. They are the United States and three European Union countries – the Netherlands, Germany and the United Kingdom, which remains part of the EU for trade purposes until its exit is finalised. The duties are reviewed every five years.

The EU duties have been in place since 2015 and the local industry has applied to have them renewed and increased because existing tariffs are ineffective. The US duties have been in force from 2000, but since 2016 the US has been allowed to bring in substantial quotas free of these duties. 

Safeguard duties

Although in terms of a trade agreement, all EU goods enter South Africa free of duty, safeguard duties can still be applied. Because of a huge volume of chicken imports, safeguard duties were approved against all EU countries in 2018. The rate was set at 35.3%, reducing to 30% in March 2019, 25% in March 2020 and 15% in March 2021. It falls away entirely in March 2022.

MFN tariffs

South Africa’s MFN tariffs apply to all countries outside the SACU and EU trade blocs. This means they apply to the Mercosur countries (including Brazil and Argentina), the United States, and all Asian nations.

In March 2020, MFN tariffs on frozen chicken portions were increased to 62% (from 37%) for bone-in portions and to 42% (from 12%) for boneless portions.

WTO, World Bank and EU information on trade, tariffs and dumping is available at:

https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

https://wits.worldbank.org/wits/wits/witshelp/content/data_retrieval/p/intro/c2.types_of_tariffs.htm

https://ec.europa.eu/trade/policy/

https://ec.europa.eu/trade/policy/countries-and-regions/countries/south-africa/





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