Chicken Industry

Higher chicken import tariffs not enough, says association

SA’s poultry sector has shed thousands of jobs and blames its demise on cheap chicken imports from Brazil, the US and the EU.

This article was first published don 13 March 2020 in the Business Day. It was written by Bekezela Phakati.Read the original article here .

An organisation that aims to fight predatory trade practices and dumping says the new, higher tariffs on chicken imports may not be enough to get the struggling poultry sector back on its feet.

On Friday, government gazetted increases to 62% on bone-in chicken portions, and to 42% on boneless portions. The SA poultry industry had applied for an 82% tariff on both categories, up from existing levels of 37% and 12%, respectively.

SA’s poultry sector has shed thousands of jobs and blames its demise on cheap chicken imports from Brazil, the US and Europe. This has brought it into conflict with SA meat importers, who blame the lack of competitiveness in the local poultry industry for its woes.

Francois Baird, the founder of FairPlay, said on Friday that the higher tariffs on predatory chicken imports from Brazil may well reduce importers’ profits, but whether or not they will stem the tide of predatory trade and dumped chicken swamping SA shores remains to be seen.

“This is the first test of the poultry industry master plan signed at the end of last year. One of the plan’s objectives was to ‘contain’ imports so that the industry could recover, grow and create jobs,” Baird said.

“To succeed, these new tariffs on chicken imported from Brazil, as well as earlier, higher duties on chicken imports from the EU, must prove to be sufficient to halt the surge of predatory imports and prevent further job losses, mostly in impoverished rural areas.

“FairPlay hopes this will be the case, but a steady rise in dumped EU imports after the lifting of bird flu bans suggests that further action will be necessary.”

Real protection needed

Chicken imports doubled between 2010 and 2018, discouraging investment in expansion and job creation. Baird said that because protection has been inadequate, most of the increase in demand for chicken in recent years has been gobbled up by predatory imports at the expense of small-scale farmers and their workers.

“The SA chicken industry is in trouble because imports have grabbed nearly 30% of the local market. Real protection for the local industry, and a spur to job creation, would be to limit imports to 10% of local sales. Restrictions in the EU have kept chicken imports in that region to about 7%, so a sharp cutback here would be possible.”

Baird said it is a pity that the International Trade Administration Commission (Itac) — the organisation tasked with customs tariff investigations, trade remedies, and import and export control —and the department of trade and industry did not grant the full 82% tariff increases that some experts and the SA poultry industry believe is necessary to protect the local market from the “damaging impact of Brazilian chicken imports”.

“Concerted action is needed against both Brazil and the EU to halt then reverse the importers’ steady and concerted takeover of our local chicken market through predatory trade practices,” Baird said.

Earlier in March, the SA National Consumer Union (Sancu), which advocates for consumer interests, urged the government to consider other measures to assist the embattled poultry industry instead of hiking tariffs on chicken imports. It said hiking tariffs invariably results in price increases across the board as local producers cash in on the reduced competition.