Read the full text below, or download a copy of the letter here.
24 July 2023
FULFIL YOUR OBLIGATIONS TO OUR CHICKEN FARMERS, MINISTER PATEL
Honourable Minister Patel
During the next few weeks, you are due to announce your decision on whether or not to impose anti-dumping duties on chicken imports from Brazil and four European Union countries. Last August you delayed this decision for a year – now is the time for you to honour your obligation to support the South African poultry industry and its workers, and South African consumers.
You will recall that the Poultry Sector Master Plan which you signed in 2019 had two overriding objectives – to expand the local poultry industry and to stop the dumped chicken imports that had put the industry in distress at the cost of thousands of jobs.
The two go hand in hand. Freed from unfair competition from dumped imports, the local industry can expand, producing more chicken for the local and export markets and employing more people in the process.
“Our aim is therefore to contain imports. In addition, we should act decisively against unfair forms of trade and any attempts to dump poultry products in our market,” the master plan says.
The expansion has happened – the industry has exceeded its obligations to create capacity and jobs. It has invested more than R2.1 billion in new capacity, with more to come, and has created some 4 600 jobs throughout the poultry value chain.
Unfortunately, some of this new capacity is lying idle, partly because the government has not yet delivered its side of the bargain.
Instead of “acting decisively” against dumped chicken imports, you decided last year to postpone for 12 months the implementation of anti-dumping duties against five countries shown to have dumped chicken here and to have harmed the local industry.
The reason you gave then was the potential impact of anti-dumping duties on retail chicken prices and food price inflation. Inflation fears are now receding. Food inflation is still high, but dropping, and consumer inflation is at its lowest level for 20 months.
However, you were wrong – dreadfully wrong – in your assumption that anti-dumping duties would have a noticeable impact on the price consumers pay for chicken in the shops.
Genesis Analytics, one of South Africa’s most respected economics and competition consultancies, has quantified how much impact the new duties would have on consumers’ pockets. The impact would be “negligible at best” is the accurate summary by Izaak Breitenbach of the SA Poultry Association, which commissioned the study.
You have a copy of the Genesis team’s authoritative report, and I hope it makes an impression on you and your advisers.
In summary, it says the average impact of the proposed anti-dumping duties on retail chicken prices would be a maximum of 2.5%.
That’s the top level – the impact is then lessened by multiple factors, including competition among poultry producers, competition among retailers, the immense buying power of large retail groups and the possibility that import prices would drop, as they have in the past, to counter an increase in tariffs.
Given the degree by which the potential 2.5% increase would be lowered, “negligible” may be an overstatement.
The report will provide you and your department with ample evidence to support the Genesis conclusions. It is a valuable resource for you, now and into the future
I hope you will not waste too much time reading a competing report produced by chicken importers, who desperately want a further delay in bringing the anti-dumping duties into force. Remember that another postponement would enable them to keep on harming the local industry by bringing in chicken portions at low dumped prices, which unfortunately don’t get passed on to consumers.
The report prepared for importers, using dubious statistical analysis and conflating categories, projects significant price increases if the duties are imposed but it does not quantify the impact. Genesis does, and importers exaggerate – the potential price impact is too small to be a factor in your decision making.
What does matter is the future of the local poultry industry, the continued existence of small-scale chicken farmers – all of them struggling to stay in business – and the consumers, particularly low- income households, who depend on chicken as a staple food.
The impact of Russia’s Ukraine war on global food supplies has shown that we cannot be dependent on imports for our food security. We need a strong local chicken industry, producing South Africa’s most popular and affordable meat protein at affordable prices, as it has for decades.
That means it is time to “act decisively” against dumped imports, as you and the government have committed yourselves to.
Please, Minister Patel, for the sake of local chicken farmers, local jobs, and local consumers – no more delays.
Francois Baird, Founder of the FairPlay Movement.