Bird flu, not tariffs, likely to impact 2023 chicken imports

Are South Africa’s chicken imports going up or down? The answer is both – they’ve been declining on an annual level since 2018, but have been rising monthly since November last year.

It’s too early to tell whether the three-month rise will become a sustained upward trend, particularly for the frozen bone-in portions such as leg quarters which cause the most problems for South African poultry farmers. The monthly percentage increases are high (31% for bone-in portions in January) but it is all off a low base because of years of steadily reducing imports.

The latest official statistics contain interesting information about what is coming in, who is supplying it, and on the steady worldwide spread of avian influenza (bird flu).

The poultry industry estimates that the lower import volumes in recent years are due to bird flu, Covid-19 disruptions and higher import tariffs, in that order. Bird flu is still having a major impact, and could disrupt trade further this year.

Bird flu has stopped imports from the European Union, which was the major source of South Africa’s chicken imports until 2016. Much of these were found to be dumped bone-in portions, which caused a crisis in the local industry. Brazil then became the leading overall supplier of imported poultry, while the United States is the main source of bone-in portions.

In 2022, more than 96% of bone-in imports came from three countries – the United States (49.6%), Brazil (30.2%) and Argentina (16.6%).  Argentina is now out of the running, with imports banned from February because of bird flu outbreaks there.

The virus is spreading in the US, and most states, including some of their biggest poultry producers, are banned from exporting to South Africa. As a result, US import volumes have dropped over the past year, and might drop further.

That leaves Brazil, the world’s largest poultry exporter, where producers are watching nervously as bird flu, carried by wild birds, spreads from country to country in South America. Brazil has never registered a bird flu case but now has neighbours to the north, west and south who are affected by the virus.

It’s impossible to predict when, or even if, the virus will hit Brazil, and if it does, what the outcome will be. Brazil is a huge country, so not all regions or producers might be impacted, at least initially.

South Africa’s bird flu outbreaks have hit hard, particularly in the Western Cape, but they have not been nearly as devastating as in some other countries.

The poultry industry in South Africa is both growing and in distress, as we highlighted earlier this month. The distress is mainly because of the disruptions of almost daily power cuts and the impact of high feed costs following Russia’s invasion of Ukraine.

Some relief is possible, but the South African government has stalled on the imposition of approved anti-dumping duties against Brazil and four EU countries, and on the revision of tariff structures to curb illegal chicken imports. It has also refused to lift the 15% value added tax (VAT) from the chicken portions which have been part of the staple diet of poor people.

It therefore seems that bird flu rather than trade measures will again be the biggest factor affecting South Africa’s chicken imports this year.