SA Chicken Producers Seek Tariffs Lifeline

SOUTH AFRICA - The future of local poultry producers is being put at risk by a large and rapid increase in the volume of imports of "extremely low-priced" frozen poultry meat, and they say they need a huge hike in import duties to stay in business.
calendar icon 16 April 2013
clock icon 4 minute read

BusinessDay reports that according to the South African Poultry Association (Sapa), several companies have gone under because of cheap imports. Sapa has applied to SA’s International Trade Administration Commission (Itac) for import duties of up to a maximum of 82 per cent — from duties of between 5 per cent and 27 per cent in force now.

Sapa said a quarterly survey of 270 small farmers in December showed that 170 had shut down operations. The industry has called for greater protection against imports before, and last year brought an antidumping application against Brazil that was sent back to Itac before a final determination was made.

Scott Pitman, head of Sapa’s broiler committee, said on Monday that South Africa’s production was about 120,000 tons a month, with imports representing 20 per cent of the market. He said it was akin to having another larger producer opening its doors in the country.

The Association of Meat Importers and Exporters (Amie) said on Monday that if the application succeeded, it would lead to increases of between 40 per cent and 50 per cent in the price of chicken imports.

Amie CEO David Wolpert said more expensive imported chicken would certainly evoke consumer anger. He disputed the size of the import market given by Sapa, saying Amie’s figures showed the import market was closer to 10 per cent or 12 per cent of local production.

Sapa said certain large producers had cut their workforces and forecast further job losses. Should this situation persist, large producers would be forced to drastically scale back operations and possibly close some operations.

Products that will be affected include carcasses with all cuts such as thighs, wings, legs and breasts removed; whole birds; boneless cuts; offal and bone-in portions. About 80 per cent of all frozen meat imports were "bone-in portions" that carry a tariff of R2.20/kg. Sapa is asking for a rate of 56 per cent or R6.53 /kg, with a maximum tariff of 82 per cent.

Mr Pitman said South African producers were efficient, but were prevented from exporting to Brazil or Russia. "All we are asking for is similar treatment. South Africa has one of the most unprotected poultry industries in the world."

Poultry prices were lower than three years ago and most producers traded at a loss, Mr Pitman said. Prices had to rise at least 10 per cent.

Mr Wolpert said they would meet their trading partners, notably Brazil, later this week to discuss the application and consider their options.

Imports from the European Union (EU) will not be affected because of the trade agreement South Africa has with the EU.

Donald Mackay, a director at XA International Trade Advisors, said that in the case of bone-in portions, about 60 per cent of imports were from the EU. But even if the tariff was applicable to only 40 per cent of the imports, it would still affect prices.

In the case of offal, about 17 per cent is imported from the EU. Sapa has proposed a tariff of 67 per cent, or R3.35/kg, with a maximum rate of 82 per cent. The current duty imposed on imports is 27 per cent.

Non-EU imports range between 200,000 and 240,000 tons a year.

© 2000 - 2024 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.