Patel’s anti-dumping duties come with a warning

“The Minister will be requesting the Competition Commission to closely monitor the prices of frozen bone-in portions and if there is price increases aimed at taking advantage of the introduction of the anti-dumping duties, the Minister may request the Minister of Finance to suspend the anti-dumping duties for a period,” said a statement from South Africa’s International Trade Administration Commission (Itac).

The minister will have to separate what he regards as duty-related price rises from the impact, at retail level, of increases introduced at producer level to recover increases in the multiple input costs that have beset poultry farmers over the past year. These include skyrocketing feed prices, which comprise 70% of a chicken farmer’s input costs, almost daily power cuts which had disrupted production, and the impact of failing infrastructure such as roads and water supply.

Because of these rising input costs, producers have been selling chicken at a loss, subsidising consumers by more than  R3 per kilogram, according to Chris Schutte, CEO of Astral Foods, which is South Africa’s largest poultry producer.

In its analysis of retail prices during and after the six-month imposition of provisional anti-dumping duties last year, respected economics and competition consultancy Genesis Analytics said there was no evidence of “supra-competitive” pricing – ie profiteering. Far from it – producer price increases had not been enough to recover the constant increases in input costs.

“This indicates that supra-competitive producer prices did not prevail when the provisional duties were in place, and there is no reason to expect that they will occur in the foreseeable future,” Genesis stated.

Four out of five for Minister Patel

There’s another twist in the application of the new anti-dumping duties. They will apply for only four years, instead of the usual five.

Anti-dumping duties are applied in five-year cycles, and are renewed only after another investigation shows they are still warranted. That investigation starts well before the five years are up.

However, the duties announced this week were approved by South Africa’s trade minister, Ebrahim Patel, in August last year. He then suspended putting them into effect for 12 months because he feared they might impact food price inflation.

Now Minister Patel has included that year, when dumping happened because the duties didn’t apply, in the five-year enforcement period for the new duties.

The poultry industry says it suffered “significant dumping” in the past 12 months, when anti-dumping duties should have protected them. It will feel short changed.