July 3, 2012

 

South Africa's poultry industry at the brink of collapse

 

 

Flooded by cheap imports, South Africa's (SA) local poultry industry says it is close to a tipping point and could go the same way as its textile industry.

 

The poultry industry employs around 50,000 people.

 

The industry says it is not asking for imports to stop, but for unfair competition practices, such as the "dumping" of chickens by Brazil on the SA market, to come to an end.

 

Kevin Lovell, the CEO of the SA Poultry Association, said chicken imports had increased by around 40% last year, and by 42% up to the end of April this year.

 

"Last year saw ZAR3 billion (US$368 million) imports of poultry. There is no way an industry can cope with this. We see ourselves in the same position that the textile industry was. There is a great chance we could go that way. If we are not at the tipping point already, we are close to it," Lovell said.

 

The SA Poultry Association, which has long accused Brazil of dumping its poultry products on SA markets, took the matter to the government's International Trade Administration Commission and asked it to impose anti-dumping duties on Brazilian chicken.

 

"Dumping" refers to a company exporting goods to a foreign market at a price lower than the price it normally charges in its own home market. This can have the effect of putting domestic companies out of business. Once a local industry has shrunk sufficiently, foreign companies can then crank up their export prices.

 

SA imported 20% of the chicken it consumed last year.

 

"We submitted the application to the ITAC on behalf of the Southern African Customs Union. After investigating, the ITAC made preliminary findings and said they agreed it was dumping, so they put provisional measures in place."

 

The ITAC imposed anti-dumping duties of 62.9% on whole chickens and 46.5% on boneless chicken imported from Brazil. These import duties are valid until August. Interested parties can comment before the ITAC makes its final decision.

 

"Brazil has tried to get these measures overturned. I had the agricultural attaché from the embassy threaten me that they would take it to the highest political level. This is not about fair competition, it is about unfair competition. Brazil has now written to the WTO (World Trade Organisation) in Geneva to request consultations with South Africa. We have 10 days to say: 'Yes, we will consult.' This is government to government, and it will be for the Department of Trade and Industry to agree," Lovell said.

 

If SA agrees, and fails to resolve the issue, Brazil can ask the WTO to set up a panel to adjudicate.

 

"In terms of WTO rules, if dumping is proved, they can't be punished, but South Africa can add a duty to level the playing field. These duties apply only to Brazil," Lovell said.

 

It had been impossible to pin down whether Brazil poultry producers got government subsidies, but their commercial agriculture got enormous government support, he said.

 

"The local poultry industry is the second-biggest market for corn. If our industry fell, corn farmers would have to export more, and at a lower price," Lovell said.

 

The number of people employed not only in the poultry industry itself, but also in the poultry service industries and grain production was close to 140,000.