Chicken Industry

Chicken importers desperate to protect profits

The Association of Meat Importers and Exporters has been waging a long and expensive public relations campaign to try to prevent tariff protection for the South African chicken industry and its thousands of jobs.

The latest development is that chicken importers have paid for an “independent” study of the chicken industry and then publicised its findings that unsurprisingly support their arguments, “This is yet another desperate attempt by rich chicken importers to stop higher tariffs cutting into their profits,” said Francois Baird, founder of FairPlay.

“The main thrusts of this so-called ‘independent’ review are that imports are not harming the local industry, and that imports are necessary because the local industry cannot meet increasing local demand. Neither assertion is supported by the facts. In addition, AMIE’s economists also manage to show somehow that higher tariffs, which will stimulate the local industry, will actually cause a net loss of jobs.

“The facts are that an ever-increasing flood of dumped chicken imports, mainly from the European Union and Brazil, has resulted in production cuts and job losses. To mention only one example: RCL Foods cut production by nearly a million chickens a week in 2017, at a cost of 1 300 jobs, and restructured its chicken business away from sectors being hammered by dumped imports.

“And the reason that local production is not increasing is that the surge of dumped imports makes it unattractive, or unprofitable, to invest in local expansion. The result is that most of the steadily increasing demand for chicken in South Africa is being taken by imports – we are exporting jobs to Brazil and elsewhere.

“If the local industry was protected against unfair competition, there would be expansion and job creation. The SA Poultry Association has estimated that 30 000 jobs could be created by replacing imports with local production without any material price increase to the consumer.

“The International Trade Administration Commission (ITAC) which is considering the industry’s tariff application, has already found that imports are harming the local industry. What has to be decided is the level of additional tariffs needed to enable the local industry to compete on a level playing field.”

Baird said it is worth noting that the tariff application will not affect all chicken – the EU and SADC regions are excluded – and nor will it affect all imports from Brazil, which is the main target of the application. The application is specifically for two product areas – frozen bone-in chicken portions, and frozen boneless chicken portions.