Chicken Industry

Duty-driven price increases “negligible at best”

When Minister Patel delayed the anti-dumping duties last year, he cited fears that higher tariffs would add to food price inflation. That would not happen, said the SA Poultry Association (SAPA).

Any price increase because of the duties would be “negligible at best”, SAPA’s Izaak Breitenbach told a press conference. The function was held to highlight a price impact investigation by Genesis Analytics, one of South Africa’s most respected economics and competition consultancies.

The Genesis research showed that the retail price impact of the anti-dumping duties Patel is considering would average a maximum of 2.5% – and that this would be reduced further by factors which would combine to bring it down.

They described their estimate as “overly conservative” and said the factors likely to reduce the price impact below 2.5% would be:

  • Producing countries could lower prices, as they had in the past, to counter the effects of higher tariffs.
  • Competition amongst South African poultry producers would restrain price increases.
  • Competition amongst retailers, who often used frozen chicken packs as a loss leader to draw customers in.
  • The huge pricing power of the big retail groups which enabled them to buy at the cheapest rates.

So, a 2.5% average price impact is as high as it might go, and the reality is likely to be a lot lower. Perhaps “negligible” is an overstatement.

Importers argue less cogently

The Genesis report was one of two sent to Minister Patel ahead of his tariff decision. The other was from the Association of Meat Importers and Exporters (Amie) urging that anti-dumping duties be postponed once again.

FairPlay’s Francois Baird urged Minister Patel not to bother too much with the Amie report. He said chicken importers “desperately want a further delay in bringing the anti-dumping duties into force”. 

“Remember that another postponement would enable them to keep on harming the local industry by bringing in chicken portions at low dumped prices, which unfortunately don’t get passed on to consumers.

“The report prepared for importers, using dubious statistical analysis and conflating categories, projects significant price increases if the duties are imposed but it does not quantify the impact,” Baird said.

“Genesis does, and importers exaggerate – the potential price impact is too small to be a factor in your decision making.”