Here are three FairPlay predictions for 2024:
Firstly, South Africa’s chicken importers will continue to avoid the facts and exaggerate numbers as they try to get import tariffs reduced or suspended.
Secondly, they will not say that increased chicken imports will provide them with higher revenues and that lower tariffs would give them the opportunity to increase their profits by buying low and selling high.
Thirdly, they will not acknowledge that import tariffs and anti-dumping duties are there for a reason, and that unfairly priced chicken imports, in contravention of international trade rules, hit local farmers and cost local jobs.
Last year provided lots of examples. As the year-long delay in imposing anti-dumping duties against Brazil and four European Union countries approached last August, importers launched a campaign for a further suspension. They attacked what they said would be “astronomical” and “absurd” new duties, such as a 265% imposition of bone-in poultry imports from Brazil.
They didn’t say that the new duties would be applied in a range, in Brazil’s case from 3% to 265%, and that most chicken from major producers would be subject to low additional amounts. Importers highlighted only the 265% figure, leaving the impression this would apply to all imports.
The government knew the facts, and imposed the new duties in August.
Then came the government’s investigation into countering food price inflation through temporary rebates on import tariffs and anti-dumping duties. The proposal was made because the government believed that extensive cullings due to bird flu would result in a shortage of chicken, particularly when demand peaked during the year-end festive season.
Importers loved the idea, and proposed a full 12 months’ suspension of the import tariffs imposed in 2020. For good measure, they said the government should also suspend the 30% import tariff on offal product such as chicken feet and livers.
To back up their demands, presumably hoping to spur the government into action, they predicted shortages and very high prices in December and going into 2024.
None of this happened, and no import tariff rebates were announced.
The local poultry industry acted swiftly to ensure continued supply, including importing millions of hatching eggs. There were manageable shortages of table eggs, but not of chicken meat, and prices do not appear to have risen much beyond the usual year-end peak, before falling in January.
Official statistics will provide the details in the months to come, but Pietermaritzburg Economic Justice and Dignity, which monitors food prices, said frozen chicken portions (the popular packs purchased by low income households) rose by only 2% in December. Food price inflation was on the decline, said PMBEJD.
Paul Matthew, CEO of the importers association AMIE, is on record as predicting that the 2023 bird flu outbreaks would result in both record chicken shortages and steep price increases in 2024. His previous predictions have often been wide of the mark, undercutting the credibility of his forecasts for this year.
FairPlay has already questioned Matthew’s contention that the bird-flu induced shortage between local chicken production and domestic consumption could reach 847 000 tonnes in the 2023/24 year. That’s more than twice South Africa’s total chicken imports including MDM paste in 2022, and five times the volume of various chicken portions imported over that year.
Yet another exaggeration? We will monitor the outcome and hold him to account.
Chicken prices are likely to rise, as producers try to recover from the losses of 2023, not because of continuing supply shortages due to last year’s bird flu. But every time prices rise, importers will renew their campaign for some reduction in chicken import tariffs, no doubt accompanied by repeated or new exaggerations.
Consumers and the government should bear this in mind when importers launch their next onslaught. They should also remember that that importers would benefit from tariff reductions. Low import prices do not result in low prices for consumers, because imported chicken sells at or near market prices.
FairPlay has yet to see any guarantee from importers that every cent of a tariff reduction would be passed on up the wholesale and retail chain. Between the docks and the shops, there are fat profits to be made.