Chicken importers ignore the facts – yet again

Chicken importers are agitating for a renewal of rebates on import tariffs that applied for the first three months of the year. As usual, their arguments ignore key facts.

The importers’ position was set out by Roy Thomas of Hume International, a prominent member of the Association of Meat Importers and Exporters (AMIE).

In an article published by Bizcommunity, Thomas appealed to South Africa’s trade regulator ITAC, which administers the rebates, to extend them for second three months (April to June) and even to apply them in perpetuity for certain products.

Thomas pushed a number of emotional buttons (price, affordability, school feeding schemes and low-income households) but did not address the two conditions – the only two conditions – that are required for the import rebates to be instituted or renewed in order to encourage additional chicken imports.

As set out in the Government Gazette in January and March this year, import rebates may be applied only if there is a shortage of chicken on the local market, and then only if that shortage has been caused by an outbreak of avian influenza (bird flu). Both conditions must be met.

Neither condition applied in January, when those regulations were published, or in March, when rebates for the first quarter were approved. Neither condition applies now, when a renewal of rebates for a further three months is under consideration.

The SA Poultry Association (SAPA) has stated consistently that there is no shortage of chicken on the local market, and that production levels have recovered fully after last year’s devastating bird flu outbreaks. They have provided ITAC with the evidence to substantiate their position.

They have also pointed out that, as there is no bird flu-induced shortage of chicken on the local market – and this is the only legal justification for rebates – to continue the rebates would be unlawful.

Affordability for low-income households, and supplies of chicken livers for school feeding schemes are important issues, but are the subject of a different debate. The rebate regulations focus only on market volumes and whether there is a shortage of chicken caused by bird flu.

While Thomas prefers to focus on price, it is notable that once again there is no undertaking from importers to pass on to consumers any lower costs that might result from reduced import tariffs. So the question is – lower prices for whom?

Importers also do not say that they stand to profit significantly from renewed rebates. Benefits to importers can come in three ways. Firstly, they will earn more money from higher import volumes. Secondly, they will have the opportunity for higher profits by importing at lower prices chicken which sells at, or close to, ruling market prices. Thirdly, what importers are pleading for is a retrospective application of tariff reductions, back to 1 April when the second quarter started. Chicken imported then has probably already been paid for and distributed. 

The rebates were established solely as an incentive for higher import volumes. However, second-quarter rebates applied now will be too late to encourage additional imports for April, May and most of June. What they are more likely to do is give importers a nice fat bonus which will go straight to the bottom line.

No wonder they are so enthusiastic about rebates.