Chicken Industry

OPINION: Claims about chicken tariffs incorrect

Recent comments on the chicken industry in Business Report (“Government tariff increases, import bans boost SA share prices,”, Business Report, 12 August 12) are wide off the mark.

Edward West is not usually ill-informed, and he knows KwaZulu-Natal well, but advocating policies that would destroy two major employers in that province – the sugar industry and Rainbow ChickenChickens, which is part of RCL Foods – cannot pass unchallenged.

The fact is that in recent years the chicken industry has had to compete with a flood of predatory imports aimed at taking over the market and giving importers pricing power, while putting thousands of South Africans out of work.

The industry could meet fair competition, but is facing an existential threat because of unfair imports dumped here below the cost of production.

Removing tariff protection would collapse the chicken industry, at athe cost of hundreds of thousands of jobs not only in chicken, but also in the grain industry, in transport and distribution, and other related sectors.

Does West really want a crucial industry wiped out in South Africa, as happened in other African countries?

West ignores the fact that the industry’s call for protection against unfair imports adheres to World Trade Organisation rules, designed to ensure fair trade and a level playing field.

He accuses chicken producers of seeking only to ensure profits, but seems to have swallowed the spurious anti-tariff arguments of chicken importers, without wondering whether it is the importers who are desperate to protect fat profits.

It is factually incorrect to argue that higher chicken tariffs mean that big producers will “stay in business by charging people more for chicken and keeping cheaper chicken out of the country”.

While higher tariffs will protect jobs, the impact on consumers is likely to be negligible, as we have seen in the past.

A more probable outcome is that importers who’ve made fortunes by importing massive volumes of dumped chicken at the cost of South African jobs will have to accept slimmer profit margins. That’s why they doth protest so much.

Alternatively, chicken producers in Brazil, the EU and elsewhere, might simply lower their asking price to absorb tariffs.

They’ve done this before – these frozen bulk packs they export contain unwanted portions, and they’ll take any price they can get.

This is why local consumers didn’t even notice previous tariff increases.

It’s simply untrue that higher tariffs will make chicken “more expensive for all of us”. This is a falsehood peddled by importers trying to intimidate the authorities who are adjudicating on the application.

If West really wants to play investigative reporter, he should look into the value chain of what he believes is “cheaper chicken”.

It might be cheap when it lands in Durban, but by the time it gets to supermarkets and food outlets, it’s priced to match local chicken.

Massive profits are being made in the process, by importers, middlemen and possibly also retailers, all at the expense of South African consumers and jobs.

Chicken importing involves hundreds of thousands of tons of meat, and billions of rand, every year.

Perhaps West’s chicken-importing friends should tell him where the money goes.

Francois Baird is the founder of FairPlay.