Chicken Industry

Chicken dumping: Rival groups battle it out

Cape Town – Another row over the trade of poultry products is playing out – this time involving advocacy group FairPlay, who is refusing to back down despite being threatened with a lawyer’s letter from the Association of Meat Importers and Exporters (AMIE).


“The last few months have seen an ongoing onslaught against imported chicken aimed at trashing the product and insinuating that it is all dumped in our country,” AMIE CEO David Wolpert told Fin24.


“We believe that any allegations of dumping should not be made via wild allegations in the media, but through a formal investigation conducted by the International Trade and Administration Commission (ITAC).”


The new lobby group FairPlay aims to stop the dumping of frozen, bone-in chicken products in South Africa, which it believes risks collapsing the already floundering local poultry market.


Bullying tactics


“We are not afraid of the bullying tactics of the dumpers or the Association of Meat Importers and Exporters, which want us to stop referring to ‘dumping’ in relation to chicken imports,” said Francois Baird, the US-based South African businessman and philanthropist who founded the anti-dumping movement.


He was responding to a letter sent from the offices of Fairbridges Wertheim Becker on behalf of AMIE, over what it called far-fetching statements relating to “dumping”.


The three-page letter queries a media release in which FairPlay claims that the dumping of chicken imports is damaging the local industry.


“The individuals, which are participants in your organisation, are none other than participants in the local chicken industry and your views in no way constitutes a balanced view, which seeks to achieve ‘fair play’ in the South African chicken industry.”


‘Promoting protectionism’


“It is merely an organisation that seems to promote the objectives of pursuing a protectionist environment, where the chicken industry can exploit the South African consumer to prevent legitimate and fair competition,” the letter reads.


It was sent by AMIE’s lawyers just before Baird made a presentation to African and global business leaders at the Initiative for Global Development in Durban in May.


Scott Pitman, MD of the Consumer Division of RCL Foods, one of the major chicken producers in South Africa, was also mentioned in the FairPlay media release.


He warned last year that the local industry would not survive in its present form for another 12 months if dumping continued unabated.


RCL Foods halved production in January this year at its KwaZulu-Natal chicken operation and closed a number of poultry farms, leading to the loss of 1 350 jobs.


In response, FairPlay – via Nortons Attorneys – accused AMIE of attempting to intimidate and gag the lobby group.


It denied that the statements attributed to it in the media release were false, baseless, unfounded and unsubstantiated. The lawyer’s letter also rejected AMIE’s allegations that Fairplay is a mouthpiece for the chicken industry.


What is dumping?


In principle, dumping refers to the sale of goods at prices lower than what markets normally will pay, agricultural economist Kobus Laubscher explained to Fin24.


“A country may have a surplus of, say, wheat which disrupts the local market, and selling part of that surplus in other countries at lower prices to protect the price in the exporting market is dumping.”


He said in a free market, local prices are on an export parity level compared to what prices are paid globally.


“In many cases, export parity prices may be below levels required for sustainability and will subsequently put local producers out of business.”


Rescue package


The government set up a ministerial task team to come up with a possible solution to save the local poultry industry from slipping into a deep crisis.


Laubscher told Fin24 the task team can help grow the local chicken industry by focusing on opening new markets for higher quality meat to be exported.


“The local poultry industry cannot produce competitively at local selling prices because import parity levels are too low to justify investment in the local industry. They cannot invest in alternative value adding, such as producing white meat for the export market, because of trade barriers.”


He also recommended that government step up inspection services of imported produce to ensure compliance.


“The dispute around the definition of what type of product is imported, must be cleared also. It is alleged that cuts are imported as off-fall by definition, but that these products are not treated and priced as off-fall in South Africa,” Laubscher reckoned.


A glimmer of hope


Market conditions for South Africa’s poultry industry are seen improving, Trade and Industry Minister Rob Davies told Fin24 earlier this month.


Davies, who was responding in a question and answer session in the National Assembly, noted that the respite is partly attributed to the prevalence of bird flu in some European Union countries, which has reduced the number of imported poultry products.


The country is also in the midst of recovering from the worst drought in history, allowing the local poultry sector to recuperate. Forecasts are showing the likelihood of significantly better summer crops, which in turn will cause food prices to drop, reported City Press in May.


By Adiel Ismail
First published in Fin24 on 22 June 2017