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Local bodies slam EU-funded study on SA’s shrinking poultry industry

First published by Lameez Omarjee on Fin24 on 21 August 2019. Access the original here.


Local bodies have slammed an EU-funded study on difficulties facing SA’s poultry industry for not acknowledging the impact of chicken dumping on the local market.


Trade dumping occurs when countries lower the prices of their exports so that they can gain market share in importing countries. In this case local bodies have said the dumping of poultry by the EU and Brazil has negatively impacted SA’s industry.


The draft report, released last week, aimed to determine the causes and impacts of poor performance in the industry, identify constraints to growth, competitiveness and transformation of the broiler industry, and to evaluate options of EU intervention. It was conducted by trade policy analysis provider DNA Economics and commissioned by the EU-SA Strategic Economic Partnership.


The study found imports are increasingly meeting demand from consumers in South Africa. This is because there has been a rapid increase in demand for mechanically de-boned meat from exporters. The study also suggests the existing SA business model precludes local producers from accessing markets to export to and there has been little investment to increase production capacity locally over the past decade.


The report will be finalised once comment from key stakeholders has been received and considered.


Aziz Sulliman, chairman of the South African Poultry Association (SAPA), in a statement criticised the EU study for failing to offer new insights or solutions to the problem of “dumping”.


‘Disappointing’


“Choosing to focus heavily on export potential instead of the pressing issues of material damage caused to the local industry due to unrestricted dumping by predominantly the EU and Brazil, and the ongoing suppression of local development that results from it, the draft study is disappointing in the scope of its research, and the depth of its findings.


“The study appears to dismiss accusations of unfair competition, particularly from EU imports, and fails to acknowledge the anti-dumping duties that are currently in place against three EU countries – the Netherlands, Germany and the UK,” Sulliman said.


In terms of competition, the study noted that the local industry is not “inefficient” relative to offshore competitors. “In terms of technical and economic efficiency, in most years South African producers can equal, or better, all of the countries from which South Africa usually imports, other than Brazil and the US,” the report read.


Sulliman contended that the study should have investigated the socio-economic impact of chicken dumping in South Africa.


“More imported chicken will bring none of these benefits to South Africa but would only enrich the importers, and export jobs to the EU and Brazil,” he added.


SAPA wants the EU to review the scope of its research to investigate “real ways” Europe can apply its resources to strengthen the South African poultry industry. “With a level playing field, without constantly battling unfair competition and predatory trade practices, the local industry would regain its buoyancy and be able to explore other potential, including a strong export market,” Sulliman said.


Not-for-profit trade movement FairPlay founder Francois Baird also argued that the study did not provide solutions for the industry nor how to create more jobs in SA.


“The predatory chicken trade practices from the EU and Brazil are creating unemployment among poor people in South Africa and then blaming them for their plight,” Baird claimed.


He argued that boosting exports, as suggested by the study, would be useful, but only after the industry had been stabilised.


“Unfair trade practices have increasingly destroyed local jobs,” he said. “Dumping would have to stop first to ensure they (local producers) have a market for the extra chicken they will be producing,” he said.


“If the EU really wants to help the South African chicken industry and its thousands of workers, it should take steps to halt the attack on those jobs by predatory EU producers.


“It would help to revive the industry and encourage it to grow its local production and then expand into export markets such as the EU,” Baird said.


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