How imports threaten survival of SA’s small chicken farmers

Reproduced courtesy of BusinessDay. First published on 28 April 2019 by Bekezela Phakathi. Access the original article here

SA Poultry Association says half of small chicken farmers have gone out of business in the past six months due to imports from the EU and Brazil

The SA Poultry Association has warned that more local chicken farmers could soon go out of business due to cheap Brazilian imports.

The association said that half of small chicken farmers have gone out of business in the past six months due to the “fact that their potential markets have been flooded by ever-increasing volumes of dumped chicken, especially from Brazil”.

The local poultry sector employs about 130,000 people. However, it has shed hundreds of jobs in recent years, blaming this on an influx of cheap chicken imports chiefly from the EU and Brazil. Brazil is the world’s largest poultry exporter.

Local farmers and unions argue that the EU and Brazil sell chicken meat below cost and have called on the government to intervene. But the EU and producers in the South American country have said their farmers are simply more competitive than their counterparts in SA.

The SA Poultry Association recently approached the International Trade Administration Commission — the organisation tasked with customs tariff investigations, trade remedies, and import and export control — calling for an increase in the ad valorem tariff on bone-in and boneless frozen chicken portions to 82% from existing levels of 37% and 12%, respectively.

“In the last six months the SA Poultry Association has watched with distress as almost half of the small farmers we had regular contact with have gone out of business, due to the simple fact that their potential markets have been flooded by ever-increasing volumes of dumped chicken,” said GM Izaak Breitenbach.

“The hundreds of workers these farmers employed have now joined the ranks of the unemployed,” he said, adding that the association is concerned about “irresponsible claims by a South African consumer protection body and a new organisation called Emerging Black Importers and Exporters of SA — fronting the Association of Meat Importers and Exporters — in support of predatory trade from Brazil, at the cost of tens of thousands of South African workers in the chicken and related industries.”

Breitenbach said imports, of which 61% come from Brazil, currently outnumber the output of even the biggest SA producer.

“The import tariffs that are in place have not slowed this down in the slightest. In fact, Brazil increased its exports to take up the slack that was caused when avian flu in the EU closed those borders temporarily. This is why the SA Poultry Association has applied to the International Trade Administration Commission to increase the tariff payable by Brazil to 82%, which is the maximum allowed by the WTO [World Trade Organisation].”

The Brazilian Animal Protein Association has said if accepted, the tariff hike will push up the price of chicken, negatively impacting on cash-strapped consumers, as well as the local importers who themselves employ thousands of people.

“The SA Poultry Association’s rationale, however, is rooted in misinformation that could further consolidate the local market and drive up the price of chicken, imperilling South African consumers who are already under significant financial pressure,” the Brazilian association said.

“With increases in VAT, electricity, petrol, transport and general consumer goods, consumers cannot be expected to endure a further 20% to 32% increase in chicken prices, which most projections indicate will be the effect of the requested tariff hike, in exchange for the further protection of a concentrated local chicken industry.

“Increasing tariffs will not change the fundamental problem, which is that local producers cannot produce enough chicken to meet the needs of the market. Imports are therefore critical, and by closing the door to one country, SA will need to open the door to another,” the association said.

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