Tariff cuts a hidden threat to consumers

Click here to watch the interview with SA Poultry’s Izaak Breitenbach.

While South African poultry producers and chicken importers agree that value added tax (VAT) should be removed from chicken, they disagree fundamentally on the removal of tariffs – as importers have proposed.

Because of rising food prices and the threat of more to come, the Association of Meat Importers and Exporters (AMIE) has called for the immediate suspension of all import tariffs on chicken, and a promise that no new tariffs will be imposed for the next three years.

This would lead to immediate price reductions for consumers, claimed Paul Matthew, AMIE’s CEO.

The SA Poultry Association (SAPA), which has spent years fighting unfairly priced, dumped and predatory chicken imports, has recently been rewarded with potentially effective import tariffs, and does not want them removed.

The producers’ view is that cutting tariffs would put at risk a huge agricultural industry, and thousands of jobs in the poultry value chain, from maize and soya to transport and processing. 

Izaak Breitenbach, head of SAPA’s broiler organisation, said in a TV interview that the main cause of food price increases is the impact of the war in Ukraine on input costs such as fuel and feed, which can make up 70% of a producer’s input costs.

It is the poultry industry, which produces most of the chicken consumed in the country, that keeps prices low, Breitenbach said. The demise of that industry would not be in the interests of consumers.

Raw material prices are at an all-time high, he noted, but this will not last. And he wondered whether any savings from tariff reductions would be passed on to consumers or end up “in the pockets of importers”.

Chicken imports have been declining for the past three years, which will have reduced the profits of these importing business. Removing tariffs would reverse that.

Could importers be talking their own book?