Ukraine was not only a major wheat exporter, it was the world’s sixth-largest poultry exporter. Now, with the conflict ravaging its poultry industry, demand has increased for supplies from Brazil, the world’s top chicken producer. The result is higher prices for Brazilian chicken, and particularly the premium-priced chicken breasts that Ukraine used to supply to the European Union.
That may be a mixture of good news and bad news for the South African poultry industry. Price increases, on top of recent anti-dumping duties, would help to reduce the volumes of Brazilian imports, and particularly the bone in chicken portions such as leg quarters that compete with local produce.
However, price increases are not a certainty. Foreign producers make their money charging high prices for white meat, while the bone-in portions (leg quarters, thighs, drumsticks etc) are unwanted surplus, dumped in frozen bulk packs in any market that will take them.
This means they are not price sensitive – producers have shown in the past that they can lower prices to counter new import tariffs. A concern for South Africa is that if Brazil steps up its exports of chicken breasts to Europe and elsewhere, it will have a greater pile of unwanted thighs and drumsticks to get rid of. And that puts South Africa squarely in Brazil’s sights.
Local producers can compete with fairly priced imports, but not with dumped chicken portions sold below the cost of production because they are effectively waste products.