April 22, 2014

 

South Africa's chicken prices to rise due to high import duties

 

 

In the next two months, South Africans could face further increases in chicken prices, which is when the government is expected to take a decision on anti-dumping duties on frozen bone-in chicken portions from certain European countries.

 

In an attempt to halt cheap imports from Brazil, import duties on various chicken products were increased in September last year. The higher duties have contributed to retail prices of two-kilogramme bags of individually quick-frozen chicken portions, excluding promotional items, rising by between 15% and 30% in the past six months, according to David Wolpert, chief executive officer of the Association of Meat Importers and Exporters.

 

Frozen chicken represents more than 70% of South Africa's poultry production and sales.

 

Duties on bone-in chicken portions were increased from a specific duty of US$2.20 per kilogramme (roughly 17%) to an ad valorem duty of 37%. An analysis of import data indicates that imports from Brazil declined significantly between October last year and January, whereas imports from some European markets, which are not subject to import duties, have increased.

 

In the 12 months to the end of January, total imports of bone-in chicken portions have declined 10.42% compared with the same period ending January 2013, according to detailed Association of Meat Importers and Exporters statistics.

 

The decline is attributed to higher tariffs and a weaker currency. The higher duties, however, affected only non-EU imports and EU imports are still running at relatively brisk volumes, according to Wolpert.

 

This may end if the South African Poultry Association is successful in its application to have anti-dumping duties imposed on frozen bone-in chicken portions from Germany, the UK and the Netherlands.

 

The International Trade Administration Commission is wrapping up its investigation into the alleged dumping. A preliminary decision was expected within two months, said its spokesman, Thembinkosi Gamlashe.

 

The poultry association has asked for duties of 91% to be imposed on frozen bone-in chicken from Germany and the Netherlands and 58% on the same product from the UK.

 

Kevin Lovell, the poultry association's chief executive officer, said it wanted an anti-dumping tariff to be imposed to correct unfair trade action, not to punish importers.

 

International Trade Advisors, acting on behalf of the Association of Meat Importers and Exporters, has highlighted several alleged flaws in the International Trade Administration Commission's investigation, raising the possibility of a trade dispute with the EU.

 

Flaws pointed out included the prices used for comparison in certain cases such as for fresh rather than frozen chicken, ignoring the high levels of brining in local chicken and comparing retail prices in Europe with bulk export prices.

 

South Africa had to withdraw preliminary anti-dumping duties on Brazilian chicken early in 2013 after flaws in its investigation led to a complaint from Brazil to the World Trade Organisation. According to its rules, anti-dumping duties can be imposed only when dumping is proved, material injury has occurred in the local market and there is a causal link between dumping and material injury.