Chicken Industry

Davies, ‘don’t be chicken over Agoa’

The poultry industry is crying foul over the apparent violation of Agoa trade agreements by the US, which has slapped increased tariffs on imports of steel and aluminium.

Poultry industry demands action against US imports

SA’s poultry industry, which has threatened court action against the government, is adamant that trade and industry minister Rob Davies has an obligation to suspend an arrangement for US chicken to enter the country duty-free.

Marthinus Stander, chair of the SA Poultry Association’s broiler organisation, this weekargued that conditions for Davies to take action were outlined in a Government Gazette and suggested that the minister was in breach ofthe gazetted agreement.

“Minister Davies seems to have acknowledged that the gazetted arrangement is quite clear in its intent. From this it should be clear that [he] is expected to act and write to minister Nene [finance minister Nhlanhla Nene], asking him to suspend the quota as SA has already lost some of its Agoa [African Growth and Opportunity Act] benefits,” Stander told Business Times.

Agoa, which was enacted in the US in 2000, is under threat after President Donald Trump raised tariffs on steel and aluminium imports.

The SA poultry industry is angry that some of the country’s steel and aluminium exports to the US have lost their duty-free access as a result.

Three years ago, when Agoa was renewed, SA agreed to allow in 65,000 tons of US chicken duty-free per year as a quid pro quo for continued benefits for other industries under the programme.

The poultry industry, which had reluctantly agreed to the deal “for the greater good of SA”, now insists that Pretoria retaliate unless the steel and aluminium benefits are reinstated. Exports to the US by the local automotive sector are also under threat. The US is expected to say this month whether it will hike tariffs on vehicle imports.

The local poultry industry claimed that it lost 6,500 jobs following the agreement in 2015, roughly 1,000 direct and indirect jobs for every 10,000 tons of poultry imported from the US.

This included jobs lost in the maize and soya bean industries. The poultry industry consumes 90% of the soya oil cake produced in SA “So if we shrink, the soya bean farmers lose their main market,” Stander said.

However, meat importers argue that withdrawing the US poultry quota will do more harm than good and could drive up the price of chicken products.

David Wolpert, CEO of the Association of Meat Importers and Exporters of SA, said that until the Agoa agreement on US chicken imports was reached three years ago, antidumping duties of close to R9 a kilo had made it unaffordable to import US chicken.

In the past month the US quota was increased by 400 tons to 65,400 tons. These imports are subject to normal customs duties but not antidumping tariffs.

Wolpert said:”If the local [poultry] industry happens to be successful [in its litigation] then it means that … 65,000 tons would all of a sudden start incurring dumping duties. It will virtually close down the American chicken market into South Africa.”

Half of the 65,000 tons of US chicken was imported by “previously disadvantaged individuals” who would be affected most if the agreement lapsed, he said.

Most of SA’s chicken imports are shipped from Brazil, with smaller volumes from Argentina, Denmark, Ireland and Thailand.

“The closure of America would suffocate the market to an extent and it would push prices up,” Wolpert added.

Davies’ spokesperson, Sidwell Medupe, said the minister was awaiting the outcome of recent submissions for exemption from higher tariffs before acting. “We are waiting for America to decide. Even the industry, they cannot act before a decision is made.”