The United States has a glut of unsold chicken meat. South Africa can expect more dumped chicken imports as US producers seek to offload the surplus.
Key takeaways:
- US chicken oversupply: US poultry producers scaled up production expecting high consumer demand that failed to materialise, leaving them with a surplus of unsold brown meat and leg quarters.
- Risk to South Africa: To offload the surplus, US producers are likely to increase exports of unwanted chicken cuts to South Africa.
- Duty-free quota exploitation: Because South Africa grants the US a large quota free from anti-dumping duties, US exporters have significant room to ramp up these imports and undercut local markets.
Oversupply of chicken in America can be bad news for South Africa.
For years, US producers have made their money off prime cuts such as breast meat, which is in high demand in the norther hemispheres. They have sold the unwanted “spare parts” portions such as leg quarters at low prices – often below cost – to South Africa and other countries.
The US can dump chicken portions in South Africa without penalty. Since 2016, they have forced on South Africa a huge quota of US chicken imports free of the anti-dumping duties that South Africa would otherwise apply.
In recent years, that quota has not nearly been filled, and imports from the US have been a quarter and less of what they used to be. That may change now that US chicken producers have oversupplied their own market and will be sitting on an increasing mound of frozen “spare parts” – the surplus brown meat portions exported in cheap, frozen bulk packs.
The US glut was reported by the Wall Street Journal, which said poultry producers had ramped up supply in anticipation of “an onslaught of consumer demand” that didn’t happen. Consumers have stuck to beef, despite record high prices, instead of switching to chicken. And fewer bird flu outbreaks in the summer months meant reduced mortality levels.
“Poultry companies are producing more chicken than consumers can buy, depressing wholesale prices and squeezing their profits,” the Wall Street Journal reported.
That means the US has plenty of scope to dump more chicken in South Africa. Imports from the US in June were up by nearly 30% from May, but on low volumes.
Watch this space.
There’s no consumer benefit
South African consumers don’t benefit from predatory chicken imports, but importers do. These imports mean big profits for importers, not low prices for consumers.
Dumped and low-priced chicken imports should in theory result in cheaper chicken on retail shelves.
Instead, dumped chicken imports are sold at prices similar to that of locally produced chicken.
Profits go to importers and middlemen, with no benefit for the millions of poor people for whom chicken is a primary source of meat protein.
Local poultry producers, who for decades have supplied affordable chicken to the local market, are put under strain because there is no way any of them can compete with dumped import prices.
Except for chicken importers, dumped chicken is a lose-lose situation.
