October 2, 2013

 

 

South Africa's Trade and Industry Minister Rob Davies announced a 8.75 overall average percentage point increase in tariff on five categories of imported chicken products from non-European countries, excluding whole chicken .

 

European chicken enters South Africa duty-free under the bilateral trade, development and co-operation agreement between the EU and South Africa (SA). While not hitting the main target, the tariff revision is also likely to alienate South Africa's South American trading partners, particularly Brazil and Argentina, which have already complained bitterly about expected hikes.

 

The South African Poultry Association has European chicken imports in its sights and has applied to the International Trade Administration Commission (ITAC) for the use of the safeguard measures provided for in the EU-SA agreement to deal with what the association claims is dumping.

 

Association CEO Kevin Lovell expected ITAC to finalise the association's application early next year. He estimates about 80% of all chicken imports are from Europe and the increases would apply to less than 6% of local consumption. The increases were "insufficient to stem the massive amount of imports reaching our shores that amounted to more than 175-million chickens last year alone, and when mechanically deboned meat is included, equates to more than 260-million chickens".

 

The Association of Meat Importers and Exporters of South Africa estimates the market for chicken imports is about 10% or 12% of local production, but the poultry association's estimate is higher.

 

The tariff on whole birds rose from the previous 27% to 82%; carcasses from 27% to 31%; boneless cuts from 5% to 12%; offal from 27% to 30%; and bone-in portions from a specific duty of US$2.20 per kilogramme (roughly 17%) to an ad valorem duty of 37%.

 

Davies told the media the agriculture authorities would review the practice of brining - adding salt water to chicken - and would issue new regulations to ensure consumers received fair value for their money. He explained the differentiation in tariff increases for the different categories of chicken in terms of the level of consumer demand; the effect of the hikes on the poor; and the extent of the unfair competition from which local poultry producers suffer.

Davies said the tariff treatment of "bone-in" chicken portions (from a specific to an ad valorem duty) was motivated, constituting about 70% of local production and the local industry suffering from a significant price disadvantage relative to imports. They represented about 54% of total imports over the past 12 months.

 

He stressed that the level of the tariff increases had to strike "an appropriate balance" in limiting the price-raising effects on poor households while ensuring that domestic producers are placed on an improved competitive footing compared to their foreign counterparts.

 

Association of Meat Importers and Exporters of South Africa CEO David Wolpert and Democratic Alliance spokesman on trade and industry Wilmot James opposed the hikes as they held they would result in higher prices and hurt the poor.

 

Vunani Securities analyst Anthony Clark noted the revised tariffs were less than the sector requested and did not apply to European imports. They provided some relief but the sector was "not out of the woods", he said.