As it had feared, the South African poultry industry is being sacrificed as South Africa tries to avert the 30% tariffs that have been threatened on all its exports to the United States.
The current signs are bad, and there’s probably worse to come.
The latest South African offer, published this week, includes a continuation of the 72 000 tonne annual quota of US chicken imports free of the anti-dumping duties that should apply. That, unfortunately, is only the start, as the US is demanding much more than this for its poultry producers.
The duty-free quota was forced on the poultry industry in 2016 as a condition of the renewal of the preferential access for other industries to the US market in terms of the African Growth and Opportunity Act (AGOA) agreement. As those benefits have been obliterated by the new wave of US tariffs, the poultry industry has asked for that quota to be cancelled.
Instead of being cancelled, the quota is back, and it’s not tied to a renewal of AGOA, which many observers have said may not happen.
The chicken sacrifice was laid out in a government statement on its latest offer.
“Poultry – South Africa granted market access under the conditional self-ban and self-lifting system. This will ensure that the US is able to leverage the Tariff Rate Quota of 72 000 tons already agreed in 2016,” the statement said.
The “self-ban and self-lift” refers to a concession announced in June which allows the US to determine for itself which of its states may or may not export poultry to South Africa after bird flu outbreaks. This, too, has been opposed by the poultry industry, which says these decisions should be taken in South Africa.
The US is likely to demand further concessions from South Africa in the negotiations that lie ahead. America’s objections stretch beyond the R9.40/kg anti-dumping duties that have been in force since 2000 on frozen bone-in chicken portions such as leg quarters.
The US also wants its poultry exports to be absolved from the general duties which apply to a range of US chicken products. These include whole frozen chicken (82%), bone-in portions (62%), boneless portions (42%) and offal (30%).
Rumour has it that the US is aiming for an annual total of 120 000 tonnes of its chicken sent to South Africa free of any duties.
That would not matter too much at the moment, as imports from the US are extremely low due to widespread bird flu outbreaks. For four of the first six month of this year, US imports have been zero.
However, it’s a disaster waiting to happen as bird flu restrictions are lifted.
Chicken imports from the US peaked in the 2019 quota year, when 82 500 tonnes of dumped bone-in chicken flooded into the country, exceeding the then quota of 65 000 tonnes. US imports have declined since then, and were down to just under 6 000 tonnes last year.
US negotiators clearly intend to reverse this situation. The South African statement said containers of poultry and pork – another agricultural sacrifice – would leave the US in the next two weeks.
That’s the start of a planned 120 000-tonne annual onslaught of dumped chicken imports which will build up in the years to come.
The South African poultry industry is just recovering from a devastating bird flu outbreak in 2023. It is expanding and creating jobs as profits rise.
All of that will be at risk if the flood of US chicken materialises. Poultry operations will contract, small scale farmers will go out of business, jobs will be lost and there will be more suffering in impoverished rural communities.
As in 2016, a successful trade deal with the US is not going to be a success for South Africa’s chicken farmers.
