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Notable negativity from chicken importers

A letter appearing in the Business Day is the opening shot in what is likely to be another year of attacks on any curbs on chicken imports. Writing on behalf of chicken importers and exporters, Paul Matthew has set out the arguments that will be advanced yet again against new provisional anti-dumping duties on predatory chicken imports, from now until the final decision expected mid-year, and probably continuing thereafter.

Reducing imports and eliminating illegal trade are objectives of the poultry master plan, which Matthew signed and should be supporting. Instead, since the master plan was launched in 2019, importers have repeatedly attacked import tariffs and anti-dumping duties.

They give every reason they can think of except the most important one – that reducing imports threatens the fat profits to be made if you buy low and sell high.

As FairPlay has noted before (Vol 60, 30 September 2021), low import prices don’t benefit consumers. Prof Johan Willemse, a leading agricultural economist, said his research showed that cheap imports were then sold at prices close to ruling market levels, ensuring good profits for importers but not cheap chicken for consumers.

Instead importers claim, as Matthew does in his first attack of 2022, that tariffs are protectionist, that the local industry is inefficient and thus uncompetitive, and that import duties will raise chicken prices. All those arguments are wrong, as FairPlay has pointed out repeatedly.

Matthew also claims that tariffs and duties have reduced import volumes. That’s the objective, but the decline in chicken imports may have been more heavily influenced by Covid19-related disruptions of markets and logistics, as well as bird flu bans on nearly all European producers. Both of those are temporary and may change in the near future.

Similarly, food prices are rising worldwide, driven mainly by demand from China and sharp increases in fertilizer and grain prices – feed makes up nearly 70% of input costs for poultry producers.

And Matthew says trade duties are not meant to be long-term, but “a short-term measure to protect the local industry from predatory imports”. The reason that tariffs have been a long-term measure is that the local industry has been subjected to a long-term assault, over nearly two decades, of predatory chicken imports.

Matthew also believes that importers will be able to show that new anti-dumping duties are not justified – he doesn’t deny unfairly low import prices, but says the local industry has not been harmed by them.

What Matthew doesn’t say is that the trade regulator ITAC has considered and rejected that argument. In its December 2021 provisional determination of anti-dumping duties on Brazil and four EU countries, it found that dumped chicken imports had caused material injury to the local chicken industry, and threatened to do so in future.

Its all about jobs

Another aspect of the Matthew letter was picked up by FairPlay founder Francois Baird.

In a reply in Business Day, Baird said Matthew had not touched on the most important aspect of all – jobs. South Africa’s record high unemployment rate threatened growth and social stability.

“If SA is to have a future, job creation must be top of mind for every government department, policymaker and employer,” Baird wrote. “Nothing else matters because unless we create millions of jobs over the next few years the grandest policy proposals will come to nought.”

This is why FairPlay has fought for jobs since its inception, and supports the poultry master plan which aims to create 5000 new jobs.

It’s also why FairPlay has campaigned against dumped chicken imports, which have cost thousands of jobs in mainly poor rural areas.

Baird pointed out that, in implementing the master plan, the South African poultry industry had already invested more than R1 billion to create 1 300 new jobs. 

“Where is the importers’ contribution?” he asked. Where indeed.        

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