A move by Mzansi’s trade regulator to impose stiff anti-dumping duties on chicken imports from Brazil and four European Union countries, has been welcomed by the local poultry sector. Now industry leaders want to know who the local importers are who profit from what they call a predatory trade practice.
The International Trade Administration Commission (ITAC) imposed the provisional duties this month (December 2021) on bone-in chicken imports such as leg quarters, drumsticks, thighs and wings from Brazil, Denmark, Ireland, Poland and Spain. It came after the local poultry industry had made an application in February this year for anti-dumping duties from these countries.
Food dumping occurs when unwanted surplus foods from foreign countries get imported and sold locally at prices that undercut local producers. The application by the FairPlay movement and the SA Poultry Association showed that dumped chicken imports from the five countries comprised more than half of all bone-in imports to South Africa in recent years.
In 2018, 252 917 461 tonnes of frozen bone-in portions were dumped by the five countries. The figures increased to 259 385 927 tonnes in 2019. Last year, imports from the five countries decreased to 197 982 840 tonnes because of Covid-19 restrictions pathogenic avian influenza outbreaks in Europe.
FairPlay founder and chairman Francois Baird tells Food For Mzansi that the ITAC outcome was not expected until mid-2022 as decisions on such applications have taken a year to 18 months in the past.
“FairPlay has repeatedly called for speedier action on anti-dumping applications, and we are pleased with this decision. Moreover, this is another nail in the coffin for dumping and predatory trade denialists,” Baird says.
He believes that the six-month head start on duties will level the playing field for local poultry producers faster, and will save the livelihoods of many more small poultry farmers as well as employee jobs.
Food For Mzansi spoke with Baird to unpack the impact of the decision on the local industry, farmers and consumers.
What impact has dumped chicken had on the local industry?
The industry has said that dumped imports over many years, of frozen bone-in portions such as leg quarters, have caused the industry to contract, prevented investment and expansion and resulted in the loss of thousands of jobs. These include many smaller and black-owned chicken producers who have gone out of business or stopped raising poultry.
With the provisional anti-dumping duties now imposed, what are the next steps?
A final determination on the application for anti-dumping duties is expected by mid-2022. The industry has applied for anti-dumping duties based on dumping margins – the price [the overseas producers can get from] dumped imports versus the calculated price of those products in the producing country.
The dumping margins are 110% (from Brazil), 177% (Denmark), 158% (Ireland), 35% (Poland) and 91% (Spain) respectively.
The governments of these countries need to take action against the companies that dump chicken in South Africa and elsewhere. The World Trade Organisation also needs to vigorously pursue a new trade regime to stop predatory trade such as dumping.
Do you believe government is doing enough to protect the local industry?
The poultry master plan, which the industry regards as an industry growth plan, aims to curb chicken imports, particularly dumped and illegal imports, and to enable growth and job creation by expanding the local and export markets.
Implementation has been far slower than expected, mainly because of the impact of the coronavirus on markets and logistics. Efforts are hopefully being made to speed up implementation.
One of the proposed measures is a review of the import tariff structures, which the department of trade, industry and competition has requested. The outcome is expected in the near future.
The industry hopes it will include a reference price for imported chicken portions, as this would go a long way to prevent illegal trade such as the under-declaration of imports or misdeclaration under the wrong tariff headings.
The declaration in the Government Gazette, announcing these latest anti-dumping duties, name the companies whose chicken were dumped in South Africa, but not the importers who profited from this predatory trade practice. FairPlay will be writing to the South African authorities to request this information. We need to know who are profiting from dumping.
Are local importers likely to continue bringing in large amounts of chicken?
A lot will depend on the level of anti-dumping duties finally approved. The hope is that new anti-dumping duties will reduce the volume of predatory trade through dumped chicken imports.
Unfortunately, this has not always happened in the past, as importers have shown that they can counter tariffs by reducing the profit of their dumped products. [Overseas] exporters are selling unwanted surplus products at any price they can get, while importers are able to adjust their margins.
How do imports and the new duties impact consumers?
Dumped chicken imports comprise some 20% of the local market – the balance is supplied by local producers. The provisional duties apply to bone-in chicken imports such as leg quarters, drumsticks, thighs and wings from the four EU countries. For Brazil, the provisional duties apply to bone-in chicken portions as well as chicken breasts.
Importers have in the past claimed that new tariffs will result in excessive price increases. This has not happened, as economist Professor Johan Willemse demonstrated in a published article.
Food prices are rising rapidly around the world, including in South Africa. Feed prices have risen steeply in the past year, and feed comprises nearly 70% of the input costs of chicken producers.
Therefore, chicken prices are likely to increase, but the new anti-dumping duties would likely not be the cause [based on past experience].
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