Analysis shows unintended impact of poultry import rebates

Import tariff rebates on bone-in chicken such as leg quarters will be even more damaging to the local poultry industry than South Africa’s trade regulator, the International Trade Administration Commission (ITAC) had intended.

This emerges from a brief circulated by the authoritative XA Global Trade Advisors, headed by Donald Mackay.

In the brief, XA’s Arista Nel published a table showing that the announced rebates would bring import tariffs on bone-in portions down from the current 62% to 25%, while tariffs on boneless cuts would drop from 42% to 30%.

However, the published rates were an “understandable mistake” and were clearly not what the ITAC had intended, XA said. The trade regulators’ board reports showed that what ITAC had in mind was a return to the tariff levels that had applied before the last increase in 2020 – 37% for bone-in portions and 12% for boneless cuts.

Bone-in portions (leg quarters, thighs, drumsticks and wings) are the imports that do most harm to the local poultry industry, competing with locally produced frozen packs. Every one of the nine anti-dumping duty decisions that local producers have secured concerns bone-in portions.

Now, according to what XA is reporting, a successful rebate application would allow bone-in imports to come in at tariffs discounted even lower than the regulator had intended – 25% instead of 37% – while rebated tariffs on boneless cuts would be higher – 30% instead of 12%.

There’s no confusion about offal, which is imported in large quantities. The rebates scheme provides for a full rebate of the current 30% general tariff that applies to imports of chicken heads, feet, livers, etc.

The XA brief clears up possible misunderstanding about how the rebates will work.

The government gazette announcing the rebates specified that the temporary rebate for bone-in chicken portions such as leg quarters would be “full duty less 25%” while for boneless portions it would be “full duty less 30%”.

What does this mean? As has been explained to us, and as XA makes clear, the 25% and 30% are not reductions to the existing tariffs, they replace them. The 62% import tariff on bone-in portions will become 25% after the rebates, and the 42% tariff on boneless cuts will come down to 30%.