April 18, 2013

 

South Africa's chicken producers seek hike on import tariffs

 

 

Due to a large and rapid increase in the volume of imports of 'extremely low-priced' frozen poultry meat, local poultry producers in South Africa claimed their future is being put at risk and that they need a huge hike in import duties to stay in business.

 

The South African Poultry Association (SAPA) said several companies have gone under as a direct result of cheap imports. SAPA has applied to South Africa's International Trade Administration Commission (ITAC) for import duties of up to a maximum of 82%, from duties of between 5% and 27% 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 (Apr 15) that South Africa's production was about 120,000 tonnes a month, with imports representing 20% 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% and 50% 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% or 12% 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% of all frozen meat imports were "bone-in portions" that carry a tariff of ZAR2.20 (US$0.24) per kilogramme. SAPA is asking for a rate of 56% or ZAR6.53 (US$0.71) per kilogramme, with a maximum tariff of 82%.

 

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, Pitman said. Prices had to rise at least 10%.

 

Wolpert said they would meet their trading partners, notably Brazil, later this week to discuss the application and consider their options. Imports from the 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% of imports were from the EU. But even if the tariff was applicable to only 40% of the imports, it would still affect prices.

 

In the case of offal, about 17% is imported from the EU. SAPA has proposed a tariff of 67%, or ZAR3.35 (US$0.37) per kilogramme, with a maximum rate of 82%. The current duty imposed on imports is 27%. Non-EU imports range between 200,000 and 240,000 tonnes a year.