Chicken Industry

Govt approves import tariff hike on chicken portions

On Friday new tariffs on imported chicken portions were published in the Government Gazette.

This article was first published by Fin24 on 13 March 2020. Written by Carin Smith and Khulekani Magubane. Read the original here .

Deputy Minister David Masondo has approved increases to 62% from 37% on bone-in chicken portions, and to 42% from 12% on boneless portions. The SA poultry industry had applied for an 82% tariff on both categories.

In the view of Francois Baird, founder of the FairPlay Movement, the higher tariffs on chicken imports from Brazil may well reduce importers’ profits, but whether or not they will “stem the tide” of what he views as “dumped chicken swamping South African shores” remains to be seen.

According to FairPlay, chicken imports doubled between 2010 and 2018, discouraging investment in expansion and job creation at the expense of small-scale farmers and their workers. FairPlay estimates that imports take up nearly 30% of the local market.

For Baird the increased tariffs are the first test of the Poultry Industry Master Plan signed at the end of last year. He says one of the plan’s objectives was to “contain” imports so that the local industry could recover, grow and create jobs.

“Whether this (new) level of tariffs does so, remains to be seen. To succeed, these new tariffs on chicken imported from Brazil as well as earlier higher duties on chicken imports from the European Union (EU), must prove to be sufficient to halt the surge of predatory imports and prevent further job losses, mostly in impoverished rural areas,” Baird said in a statement.

FairPlay anticipates that further action will be necessary and would like to see imports limited to 10% of local sales. It points out that restrictions in the EU have kept chicken imports in that region to around 7%.

“Imagine the local economic impact if the R6bn that was paid last year to foreign producers of imported chicken had instead been spent on local production and local grain, all of which would have generated local tax revenue and, significantly, local jobs in rural areas where they are most needed,” comments FairPlay.

“If these new tariffs prove insufficient to generate a revival of the chicken industry, then a further increase will be necessary. Otherwise the whole master plan, and all its crucial outcomes, will be in jeopardy.”

On Thursday the International Trade Administration Commission (ITAC) told Fin24 that its role is to provide technical advice to the Department of Trade, Industry and Competition (DTIC) on trade policy related matters, administer tariffs and defensive measures guided by domestic and international law.

ITAC had evaluated an application by Webber Wentzel, which submitted it on behalf of the South African Poultry Association, for an increase to 82% in the general rate of duty – not only from Brazil – on frozen chicken; bone-in portions and boneless cuts.

“ITAC’s processes of evaluating tariff amendment applications includes a preliminary phase, a publication phase and a final evaluation phase. Once the final evaluation phase has been completed, ITAC forwards its recommendation in the form of a report or minute to the minister of trade and industry, who decides whether to accept or reject ITAC’s recommendation,” Fin24 was told.

“If the minister decides to accept ITAC’s recommendation and it involves a tariff amendment, he will request the minister of finance to implement the amendment in the Customs & Excise Act through a publication in the Government Gazette. ITAC does not have control over these decision or, where applicable, implementation processes.”

The Association of Meat Importers and Exporters (AMIE) had warned government in the past against increasing tariffs for imported chicken products, saying such an increase would see prices skyrocket and jobs plucked from the meat industry. According to AMIE, there is no dumping of surplus international chicken products on the SA market.

The association claimed that it serves fundamentally different parts of the market and that the entire output of the local product is used primarily by the fast-food market. It is of the view that imports are used as a scapegoat for other issues affecting the local poultry industry.

The South African National Consumer Union had expressed fears in the past that higher tariffs would raise prices of poultry products beyond what low income households can afford.