Chicken Industry

The ugly truth is that ‘cheap chicken’ never reaches the consumer

In April, the newly created Emerging Black Importers and Exporters South Africa (Ebiesa) formed an alliance with the South African National Consumer Union (SANCU). That is news we should all be able to welcome. However, it transpires that this alliance appears to be no more than a tactical front and an ill-informed mouthpiece for Brazilian big poultry exporting interests.

Interestingly Ebiesa has suddenly emerged as a new voice for South Africa’s meat importers who up until now have been represented by the Association of Meat Importers and Exporters (AMIE). To date South Africa’s meat importers and exporters as represented by AMIE, is a business group that is about as far removed as it is possible to be from a transformed organisation.

Listed among AMIE’s members and its leadership are companies headquartered throughout Europe, Brazil and Asia. Clearly AMIE’s interests are not the interests of South Africa nor of the tens of thousands of South African’s employed by the chicken industry. Nor are they the interests of thousands of small scale farmers.

Ebiesa and SANCU claim that “increasing tariffs on imported chicken could hike local chicken prices by up to 32%, putting South African consumers under further financial strain and impacting food security for the poor”. This is a total fabrication. A malicious attempt at misdirection and misinformation aimed at the consumer. The fact is that increased tariffs would add not one rand to the price of locally produced chicken. Any tariff increase would only effect imported chicken and that cost could easily be absorbed by the importer at no cost to the consumer.

Even the University of Pretoria’s Bureau for Food and Agricultural Policy, whose figures they claim to be quoting, have since rubbished this statement.

And looking into the numbers, it’s easy to see that there’s no truth to this claim.

SARS data shows that the average landed price of Brazilian chicken leg quarters in January 2019 was R13.52 per kilogram, and when the existing 37% tariff is added it comes to R18.52. The average retail price of chicken in South Africa is around twice that – as an example, this week at Game leg quarters are sold at R37.80 per kilogram. That is 104% over the landed price.

If ITAC were to approve the 82% tariff, the landed price for Brazilian leg quarters will increase to R24.61/kg, and if the price in Game stays the same at R37.80/kg, as presumably it will, there will still be a mark-up of 54%, or 1.54 times the landed price. The bottom line is that an 82% anti-dumping tariff should have zero impact on the retail price of chicken and zero impact on the consumer.