Chicken importers like to pretend that higher import tariffs will result in soaring prices for all chicken in retail shops. The latest report from Genesis Analytics provides a healthy reality check: the anti-dumping duties the government is considering will only apply to a fraction of the chicken consumed in South Africa.
Genesis points out that the anti-dumping duties will affect some chicken (frozen bone-in portions) produced by some companies in some countries (Brazil, Denmark, Ireland, Poland and Spain).
In the six months in 2022 when provisional duties were in force against those countries, only Brazil was affected because imports from the EU countries were blocked by bird flu bans. During that period, Brazil accounted for a third of South Africa’s bone-in imports, with most (50%) coming from the United States.
Also during that period, the landed import price of bone-in portions was only 38% of the retail price – i.e the price of imported chicken more than doubles when it reaches the shops.
This means the provisional tariffs on Brazilian chicken affected a third of South Africa’s bone-in imports and could have influenced less than half of the retail price of that third of imports.
The percentage of affected imports would rise if EU countries are freed from bird flu bans (as has already happened to Ireland and the Netherlands) Genesis says, but it warns against assumptions on how duties will affect retail prices.
It says that because of the many factors that would lessen the extent to which selectively imposed duties might affect retail prices, the impact “can be complex to predict, and more diluted than is often assumed”.
“Without properly identifying and considering these factors, any view on the causal increase in the retail price is likely to be superficial and overstated,” Genesis states.
It’s also worth noting that most chicken in South African shops is produced locally and is therefore not affected by import tariffs. The SA Poultry Association has calculated that in 2022, imports accounted for 16% of chicken consumption, and more than half of that was mechanically deboned meat (MDM).
So, next time the importers come with scare stories about huge price increases because of import tariffs, think again. Their warnings might be “superficial and overstated”.