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Chicken importers are profiting at the expense of consumers

Statement by Francois Baird, founder of the FairPlay movement

The South African public should not pay too much attention to the wailing of chicken importers that government’s localisation policy will push up retail chicken prices.

This is the basis of their sustained attack on the localisation policy, which aims to reduce imports and boost local production. Unfortunately it appears that importers’ own actions belie their supposed promotion of consumer interests.

If chicken importers were really so concerned about consumers, and particularly poor households, then the answer is in their hands – ensure that the low prices at which they import containers of dumped and predatory chicken portions result in lower retail prices.

But they don’t. Perhaps because their business model appears to be to import low and sell high, making fat profits with little concern for consumer interests.

As the respected agricultural economist Prof Johan Willemse confirmed in a recent analysis: the low import prices of frozen chicken portions are not passed on to consumers.

“Claims by importers that they provide cheap meat to South Africa’s poor consumers have not so far been substantiated,” he wrote in an article in Landbouweekblad. As an example, he said the import price of frozen chicken thighs in June this year was R14/kg , but the domestic price was nearly R75/kg.

Other examples are plentiful in official import statistics. Every month chicken imports, particularly from Brazil, are landed in South Africa below the price at which South African producers sell their chicken. And this is after paying import tariffs which in Brazil’s case add 62% to the import price.

Willemse said the available information indicated that, instead of low import prices being passed on to consumers, imported chicken products were priced slightly below locally produced chicken. This, he said “assured importers of fairly good profit margins”.

He also noted that the effect of tariffs and anti-dumping duties can be blunted if declared import prices are deliberately kept low.

Analysts regularly point out the wide discrepancy between what farmers receive for chicken and what consumers pay in the shops. This is where the consumer focus should be – starting with the contribution that chicken importers can make.

So next time importers cry that localisation will push up chicken prices, they should be asked why they continue to boost their profits at the expense of the consumers they profess to support.

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