Importers, Producers Bicker over Poultry Trade

SOUTH AFRICA - Poultry importers hope that the probe into the domestic industry will curb prices.
calendar icon 3 March 2010
clock icon 4 minute read

Importers of chicken meat hope the announced investigation into the poultry industry by the Competition Commission will end import duties they say have prejudiced consumers for 10 years, reports Independent Online of South Africa.

Nandi Mokoena, the commission manager, confirmed recently that the body had two investigations under way into possible price-fixing, market allocations and exclusive supply agreements among past and present members of the Southern African Poultry Association.

The news has evoked renewed calls by importers for a review of tariffs they say disadvantage consumers.

Anti-dumping tariffs of up to 6.96 rand (ZAR) per kilo imposed on imported American frozen chicken portions in 2000 led to a drop in chicken pieces from that country, and left the market for frozen chicken wide open to mainly Brazil and Canada, who pay an import duty of ZAR2.20/kg.

The US tried to have the anti-dumping ruling reviewed in 2005 but the local poultry industry successfully opposed the application and the measure was extended to 2011.

Philip Amos, of Stocks Meat Markets, said the duties on frozen chicken pieces from the US had denied local consumers the lower prices that accompanied larger quantities of imports.

Mr Amos said: "The two other biggest sources of that chicken were Brazil and Canada, which had control of the pricing.

"Consumers ended up paying more for frozen chicken. Had American chicken imports not been hampered by prohibitive tariffs, there would have been more competition and prices would have been lower."

He added that the local poultry market is "a mature industry that does not need the kind of protection it is getting from the anti-dumping duties imposed on the US."

Chicken importer Patrick Gaertner, of Orion Cold Storage, told Independent Online that local poultry producers were already enjoying price control stemming from protective duties imposed on overseas chicken producers exporting to this country.

He said: "In addition, they have the advantage of prohibitive duties on chicken from the US, imposed before the Competition Commission began investigating these forms of control.

"I am hoping that through this investigation these anti-dumping duties will be seen to be nothing more than protection for the local industry, and will lead to the normalising of the market."

Mr Gaertner added that he is not objecting to protection for local poultry producers but wanted to see "a fair duty across the board, not anti-dumping duties on select market suppliers".

Bernard Zive, of Snoek Wholesalers, estimated that the ZAR2.20/kg duty on chicken imports from Canada, Brazil and Argentina cost consumers about ZARR3/kg more for frozen chicken, when the mark-up and VAT were included.

He explained: "There are so many basic commodities in food that enjoy protection, and that causes a lot of inflation in the bottom end of the market. If the government took the protective duty away, it would force producers to be competitive and they could not collude on prices."

The anti-dumping duties imposed by the Department of Trade and Industry on US frozen chicken pieces hit poor people the hardest, said Mr Zive.

According to Independent Online, Kevin Lovell, chief executive of the Southern African Poultry Association, said: "To claim that consumers are suffering as a result of both our understanding of fair competition and also implementation of a sensible trade policy is extremely short-sighted and narrow on the part of importers."

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