The mysteries of Minister Patel’s rebates on chicken imports

It’s only just started, but 2024 has already delivered a huge mystery – why has the government authorised rebates on chicken import tariffs to counter a shortage which doesn’t exist?

The rebates idea was raised last October, when the government wrongly expected a huge chicken shortage because of bird flu outbreaks, and it feared prices would skyrocket during the year-end festive season. Neither happened, and no rebates were announced.

Now, in January 2024 when there’s no shortage, when chicken is in surplus and prices are dropping, the government decides that temporary rebates on chicken import tariffs would be appropriate. Why?

Rebates may be applied “for the duration of a shortage of chicken as a result of an outbreak of highly pathogenic avian influenza in South Africa”. So, two interdependent conditions – there must be a shortage of chicken on the local market, and that shortage must be the result of an outbreak of bird flu. Neither applies at the moment.

What constitutes a shortage? That definition was conspicuously absent from the lengthy guidelines for would-be applicants published this week by trade and industry Minister Ebrahim Patel. And how is causation – a notoriously difficult thing to prove – going to be determined given all the variables that go into chicken farming? What if a shortage is caused by a lack of infrastructure, water supply, or weather – will it automatically be attributed to bird flu? The arbitrariness of how these rebates are to be applied is a matter of concern as it will leave the decisions to the inscrutable discretion of bureaucracy and officials.

Chicken importers have 10 days from 26 January in which to apply for their first import rebate permits. The International Trade Administration Commission (ITAC), which is the arbiter, would then have to consult the Department of Agriculture and make recommendations to the government. Logic says that no rebates are necessary because there is no immediate or foreseeable chicken shortage.

If ITAC comes to that conclusion, or if importers look at the facts and decide they can’t justify a rebates application at the moment, nothing will change immediately.

That could mean that the rebates are nothing more than a threat to local poultry producers that will sit on some government shelf in case it is needed at some point in the future.

So why announce these rebate regulations now? Minister Patel wanted the rebates. Now that he’s got them, he needs to take the nation into his confidence.