Chicken Industry

How imbalance in chicken imports brings hardship under the guise of trade

None of our so-called trade partners accepts chicken from SA, which is all about political will. By Francois Baird and Katishi Masemola.

In the great debate around the fairness or not of increased tariffs on chicken imported into SA, a red herring has emerged: exports. Instead of asking for tariffs to protect the local industry against imports, SA can cure all its chicken ills by exporting. Job done. Easy as (chicken) pie.

Except it’s not. The exports argument is a red herring, simply because exports can never be the answer to the general unfairness that characterises the international trade in chicken at the moment.

A handful of powerful trade entities, notably Brazil, the EU and the US, have caused and continue to perpetuate an imbalance in chicken trade that visits hardship on dozens of other countries and millions of people. They perpetrate this crime under the guise of trade, partnership and giving consumers in developing countries access to cheap protein.

What they do in reality is get rid of their by-products at prices that destroy local industries. Honest, ethical and customer-centric trade partners produce what their customers want. he world’s great chicken exporters foist the leftovers in their freezers on the developing world.

None of the exporters with whom FairPlay has an issue export to SA a product they make specifically for SA consumers. Chicken pieces arrive in bulk-frozen mass and have to be thawed out, packed and sometimes even refrozen before consumers can buy them. It is such a customer-unfriendly process that the importers usually cannot even be bothered to specify the country of origin of the pieces sold to consumers.

This attitude is reflected in the exports arena. None of our so-called trade partners accepts chicken from SA, despite claiming that we have access to their markets. The EU and US cite food safety concerns, not because our chicken is unsafe but because we don’t test the way they want us to. In international trade terms these are called nontariff trade barriers.

These technical trade requirements are the red herring within the red herring. When a traffic cop wants to give you a ticket they will keep finding reasons to do so, despite your best proof that your vehicle is roadworthy and licensed. The same applies to our trade nonpartners.

It is not about SA meeting or not meeting technical standards; it is about political will. The EU and US, like Brazil, have no intention of allowing SA chicken into their markets, despite what they say. If they had, they would long ago have started acting as partners.

In the case of the EU with its very specific food-testing requirements, it would mean, for instance, helping to establish the independent testing facilities it requires. At the very least the EU would have guaranteed local producers a slice of its tariff rate quota, giving the assurance of a market our country needs to invest in the infrastructure that can deliver what the EU requires.

As for the US, much as its African Growth and Opportunity Act is held up as a mutually beneficial trade agreement, it is in fact a concession between the US and a country that is on its official list of developing countries — ours in this instance. Therefore, to demand a bilateral trade agreement for chicken imports is to demand equality from a partner that has been recognised as unable to deliver it.

The game of golf offers a handy template. To level the game, lesser players are given a handicap to allow them to compete while their game improves. Applied to the chicken trade arena, SA would receive preferential terms in a bilateral agreement by, for example, being allowed to export 65,000 tons of tariff-free breast meat into the US as quid pro quo for the 65,000 tons of individually quick frozen (IQF) portions it exports to us. Better yet, allow double that amount as imports from SA and you have a handicap that might actually enable growth.

But the chicken caucuses in both the US Senate and House of Representatives — funded by the American chicken industry — would never allow this, because it’s not actually about fair trade it is about protecting American jobs. As it is about protecting EU and Brazilian jobs. Yet when SA wants to protect SA jobs, the p-word is thrown at us. Apparently job theft is legal, but not job protection.

And job protection should be of critical importance at this point in SA, with the unemployment rate, as recently announced in Stats SA’s quarterly labour force survey, now standing at 9.9-million — more unemployed individuals than in China, with its 1.4-billion people. SA simply can’t afford to allow more job losses, and the reality is that this is exactly what chicken dumping continues to cause.

If anything, the formal chicken industry on its own could create as many as 30,000 more jobs if dumping was curtailed to allow local producers to expand and fill the demand. If the US and EU allowed and facilitated exports instead of preventing them using technical barriers to trade, even more growth would be possible.

Interestingly, the business development support that is granted to SA business people by the US and Brazil goes to the importers, as Unati Speirs from the Emerging Black Importers and Exporters of SA (Ebiesa) so proudly confirms. So, instead of supporting a developing country’s economic advancement, the exporters enlist local business people to help them expand their markets. Such cynical serving of self-interest is nothing short of deplorable.

So, given that the developed world’s markets are closed to us for now, surely the rest of Africa is an export opportunity ripe for the picking? Of course it is, but only if we want to do to our neighbours what Brazil, the US and the EU are doing to us. It is disturbing to learn that this is exactly what Ebiesa means when it talks about “exporting” — the unsavoury game of pass the parcel with dubious Brazilian chicken that they send across our borders into the rest of Africa, rather than supporting efforts to make SA producers export-compliant and benefiting a huge SA value chain rather than their own bank accounts.

Surely we cannot justify exporting job theft to the rest of our continent? Unlike the importers, some of the big local producers are investing in countries north of our borders to support the development of domestic industries.

It is important to note that regardless of what industry players can and cannot do, international trade is a government-to-government process. Without the government negotiating trade agreements that will support local industry, exports will sadly never be a reality.

Several factors have contributed to the government’s reluctance to support the local industry in the past. Fortunately, there are encouraging signs that the tide is turning, notably the masterplan that is being developed as a joint effort of the government and the industry to create an enabling environment for industry growth through stakeholder collaboration and transformation.

However, exports should always be phase two in the project to make the local industry safe. The first step has to be to turn jobs theft into job creation by putting an end to reckless imports and dumping. After all, if the local chicken industry is destroyed by imports, there will be nothing to export.

Baird is founder of FairPlay and Masemola is secretary-general of the Food and Allied Workers Union.

Originally published on BusinessDay Live .