The South African poultry industry’s hopes for the early implementation of approved anti-dumping duties on dumped chicken imports may have been dashed by a Reserve Bank article supporting the 12-month suspension ordered earlier this year.
The duty suspension was approved by Trade, Industry and Competition Minister Ebrahim Patel, despite his acknowledgment that Brazil and four European Union countries were found dumping chicken portions in South Africa, and that the anti-dumping duties were deserved.
Patel says that he suspended implementation of the duties for 12 months, fearing that they might contribute to soaring food price inflation. He undertook to consider implementing the duties earlier than 12 months if food inflation abated sufficiently.
While the poultry industry has said the suspension is an invitation for increased volumes of dumped chicken that would harm local producers, a Reserve Bank article says the suspension is in consumers’ interests.
The article appears in the Bank’s latest Monetary Policy Review under the headline “How pricey can frozen chicken get?”. The author is not named.
Despite the authority that Reserve Bank opinions carry, the arguments in this piece are likely to be contested by the local poultry industry.
For instance, it states, without proof of a link, that increases in most favoured nation (MFN) tariffs from 2010 to 2022 had increased consumer prices “by between 13% and 40%”. It also said that the widening gap between the landed prices of frozen chicken and the post-tariff prices showed “the adverse impacts of tariffs on consumer prices”.
The author lays the blame for rising consumer prices on import tariffs and, to a lesser extent, anti-dumping duties. There is no mention of the huge increases in global chicken prices in the last few years, occasioned by the impact of the Covid-19 pandemic, widespread bird flu outbreaks and the effects of the war in Ukraine on feed, fertiliser and fuel costs. Feed alone accounts for up to 70% of poultry input costs.
The article mentions, but does not explore, the fact that the impact of import prices on consumer prices depends on the extent to which foreign exporters “absorb some of the cost”. The local poultry industry has pointed out repeatedly that chicken importers do not pass on to consumers the benefits of cheap dumped imports, so “there is no cheap chicken on the shelves” and importers get rich.
The article also draws no distinction between general import tariffs, which are part of trade policy, and anti-dumping duties which are an internationally agreed counter to dumped imports that break international trade law and harm local industries.
What Minister Patel has suspended are anti-dumping duties which he has agreed are fully justified because they are harming local producers and local jobs. He has extended that harm for a further 12 months and might be tempted to use the Reserve Bank’s suspect arguments to keep the suspension in place for that full period.
Criticism of the Reserve Bank article has alsocome from Marthinus Stander, MD of Rainbow Chicken and a board member of the SA Poultry Association (SAPA).
“The Reserve Bank’s commentary is both unfortunate and uninformed,” he said. “The impact of rising input costs can be seen on all basic foods and proteins.”
Stander said that there were no facts or research to illustrate the interaction between tariffs and retail prices. He suggested that a comparison of price increases in other basic foods vs those of chicken might show that poultry producers were absorbing cost increases to a greater extent than other foods.