The basis of South Africa’s chicken dumping problems is that northern hemisphere consumers prefer white chicken meat, which sells at a premium. The brown meat – the leg quarters, thighs and drumsticks that many in Africa and elsewhere prefer – is discarded by suppliers to those markets.
It is frozen and sold off in bulk as unwanted surplus, and that’s where the disputes start.
South Africans prefer those brown meat portions, so we get them, often at dumped prices, from the European Union, Brazil, the US and other major chicken producers. They have made their profits from the white chicken breasts sold in North America and Europe, and can afford to sell off the brown meat for whatever price importers in other countries will pay. They have also been able to lower prices to counter new import duties.
Coupled with duty-free trade agreements with the EU, that situation nearly extinguished the poultry industry in Ghana – it is only now trying to recover after expensive investments – and put the South African chicken industry into crisis.
Now, even though there are no imports from the EU at the moment because of widespread outbreaks of bird flu, dumping continues from other countries with a huge surplus of brown meat. Until recently, that included the US, but spreading bird flu has led to diminishing exports there too.
The fact that US producers are selling off brown meat as unwanted surplus is highlighted in the sunset review application. Dumping happens because of the clear preference of US consumers for “white meat” over “brown meat”, a situation which ITAC says it has itself verified in the past.
The application notes that US exports to South Africa have consisted exclusively of the “brown meat” their consumers did not want.
This leads to a problem: how do you calculate dumping by comparing selling prices of frozen chicken portions in the US and SA when US consumers don’t buy frozen leg quarters and other “brown meat”?
The suggestion, accepted by ITAC, is to construct a “normal value” for US chicken portions based on the price for a whole broiler chicken as provided by the US Department of Agriculture. Whether or not US poultry producers and SA chicken importers will dispute this calculation remains to be seen.
It illustrates how global preferences – white chicken meat in the north and brown meat in the south – not only influence chicken sales but are the origin of international trade disputes.