This is one of the outcomes of a “positive and fruitful” meeting that executives from the SA Poultry Association (SAPA) held with Minister Ebrahim Patel of the Department of Trade, Industry and Competition last week.
The rebates were instituted from January this year, with quotas of 43 000 tonnes every three months.
The continued implementation of the rebates was one of two issues raised by the poultry industry at the meeting. The second was the recently announced market inquiry to be conducted by the Competition Commission into South Africa’s poultry market and its value chain.
SAPA’s Izaak Breitenbach said in a statement that the import tariff rebates had been instituted to address a potential shortage of chicken on the market.
“However, our data indicates that there has not been and is no shortage in the supply of chicken to the market, and thus there is no need for the rebates to continue,” he said.
One of the issues raised with Minister Patel was that the rebate regulations do not provide for poultry industry input when rebates are considered.
“It was agreed that the industry will submit updated data to the International Trade Administration Commission (ITAC) which administers the rebates, and to the Department of Agriculture, Land Reform and Rural Development (DALRRD), which must certify any shortage.
“We will do this urgently, as a decision will soon be made on whether to continue the rebates in the second quarter, which begins next month,” Breitenbach said.
ITAC has estimated a shortage of 172 000 tonnes of chicken in 2024, and plans to address this with rebates of 43 000 tonnes each quarter. The scheme can be discontinued if it is found that there is no shortage.
“The meeting allowed all parties to hold frank discussions, and a good understanding of the respective viewpoints was achieved with mutual commitment and agreement on the way forward,” said Gary Arnold, the chairperson of SAPA’s broiler organisation.
“The industry shared insights into how it has been able to mitigate any shortages in the supply of chicken through multiple contingency plans introduced. This included the importation of broiler hatching eggs over the past six months.
“The industry also reaffirmed its commitment to cooperating and fully participating in the poultry market enquiry, utilising the opportunity to highlight the strategic importance of the industry to local food and job security.
“As a stakeholder to the poultry sector master plan the industry has committed significant investment in capacity to the long-term localisation of poultry production in South Africa.
“Minister Patel recognises the operational challenges faced by local poultry producers in recent times including the energy shortage, but confirmed his commitment to seeing a profitable and diverse industry by partnering with all stakeholders to the poultry sector master plan,” Arnold concluded.
Also in attendance at the meeting were officials from ITAC, as well as Marthinus Stander of Rainbow Chicken and Richard Manzini of Daybreak Farms as part of the SAPA delegation.
Poultry industry challenges rebates justification
The South African poultry industry hopes to persuade government officials that they were wrong to boost chicken imports through import tariff rebates.
Poultry producers say the current market reality shows the error of a forecast used to justify the rebates – a prediction made last December that there would be a huge shortage of chicken in South Africa this year.
The SA Poultry Association (SAPA) says there is no shortage. Production is back to normal after last year’s bird flu outbreaks and stands at 21.5 million birds per week. It said price drops from January indicated a surplus, not a shortage.
The country’s trade regulator, the International Trade Administration Commission (ITAC) has explained its December forecast of a 172 000-tonne shortage in 2024.
That forecast rejected the poultry industry’s view that the contingency measures the industry had place, including the importation of millions of hatching eggs, would restore normal production levels. The industry believes its view has proved to be correct.
Thalukanyo Nangammbi, the communication manager of the ITAC, explained the rebates decision to Food For Mzansi. He said that, during its investigations last year, ITAC had “considered the inherent forecasting nature of Sapa’s contingency measures, which lacked a definitive methodology to ascertain guaranteed yields for the proposed strategies.
“Consequently, the commission estimates a shortage of approximately 172 000 tons for the year 2024, to be issued on a quarterly basis should it be required, i.e., 43 000 tons per quarter.”
Nangammbi said the rebate provision may be discontinued if domestic production has satisfactorily recovered from the HPAI (avian influenza) outbreak.
“Furthermore, the rebate may also be suspended in an instance where the minister of Agriculture, Land Reform and Rural Development advises the commission that the outbreak is under control and domestic production has returned to levels which safeguard food security,” he said.
The local industry says that recovery has already taken place.
