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Cheap chicken dumping continues to hurt local farmers

“South Africa’s poultry industry has experienced a 400% surge in chicken imports over the past two decades," says The FairPlay Movement founder Francois Baird. Much of these imports are predatory and detrimental to struggling local farmers

by Zolani Sinxo
4th April 2022
in News
Reading Time: 5 mins read
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FairPlay is renewing its call for Value Added Tax (VAT) in South Africa to be removed from most chicken portions to help counter the rise in food inflation. Photos: Supplied/Food For Mzansi

FairPlay is renewing its call for Value Added Tax (VAT) in South Africa to be removed from most chicken portions to help counter the rise in food inflation. Photos: Supplied/Food For Mzansi

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Provisional anti-dumping duties did little to help local poultry farmers and Mzansi needs a sweeping investigation into imported chicken. The FairPlay Movement says that masses of imported chicken products continue to compromise the poultry value chain, the businesses of small-scale poultry producers and township economies across the country.

“South Africa’s poultry industry has experienced a 400% surge in chicken imports over the past two decades,” says FairPlay founder Francois Baird. Much of these imports are described as predatory, where surplus meat that cannot be sold in the country of production is sold to South Africans at prices that undercut local farmers.

François Baird is the founder of the FairPlay movement. Photo: Supplied/Food For Mzansi
Francois Baird is the founder of the FairPlay movement. Photo: Supplied/Food For Mzansi

“This jeopardises the country’s food security and negatively impacts job creation and economic growth,” says Baird.

Government’s provisional anti-dumping duties against bone-in chicken meat imports from Brazil and several European Union countries, which were imposed at the end of 2021, were also not enough to curb unwanted imports. A proper investigation is therefore needed to protect the country’s economy, consumers and poultry farmers across the board, Baird believes.

His call is for a more effective clampdown on unfair trade practices that include dumping, the under-declaration of imports and round-tripping to avoid taxes.

“The movement outlines the effects of dumping on the food chain and food security. It also addresses affordability, access, the testing of imported chicken, and how joblessness and poverty can stunt the growth of children,” he says.

Chicken dumping occurs when an exporting country, or business, unfairly lowers the price of its surplus product just to get rid of it. The practice is often targeted at South Africa, where it is widely opposed by local poultry producers. Photo: Supplied/Food For Mzansi
Chicken dumping occurs when an exporting country, or business, unfairly lowers the price of its surplus product just to get rid of it. The practice is often targeted at South Africa, where it is widely opposed by local poultry producers. Photo: Supplied/Food For Mzansi

How war could change the market

The Russian war in Ukraine is making matters worse, says Baird. The increases in grain, fertiliser and other input costs are pushing up food and fuel prices worldwide and fast steering the poultry industry towards price hikes.

The demand for chicken from Brazil – the world’s top chicken producer – has also increased due to the conflict. The ripple effect will eventually reach South Africa. Baird explains how.

Brazilian chicken can now be sold at higher prices, particularly the premium-priced chicken breasts that Ukraine used to supply to the European Union.

“That may be a mixture of good news and bad news for the South African poultry industry. Price increases, on top of recent anti-dumping duties, would help to reduce the volumes of Brazilian imports, and particularly the bone-in chicken portions such as leg quarters, that compete with local produce.”

However, price increases are not a certainty. Foreign producers make their money charging high prices for white meat, while the bone-in portions (leg quarters, thighs, drumsticks and the like) are unwanted surplus, dumped in frozen bulk packs in any market that will take them.

“A concern for South Africa is that, if Brazil steps up its exports of chicken breasts to Europe and elsewhere, it will have a greater pile of unwanted thighs and drumsticks to get rid of. And that puts South Africa squarely in Brazil’s sights.”

Foreign producers have shown in the past that they can lower prices, even to counter new import tariffs.

And while local producers can compete with fairly priced imports, they cannot compete with these dumped chicken portions, that are basically seen as waste by the foreign countries and then sold below the cost of production.

Solution to mitigate impact on SA

“This is why the government should step in and remove the 15% value-added tax (VAT) from some chicken products. FairPlay has called for zero-rating of chicken since 2018, targeted at the portions consumed most by lower-income households,” Baird says.

The organisation believes this can be implemented immediately and will increase the affordability of South Africa’s most popular source of meat protein.

Against the backdrop of President Cyril Ramaphosa saying that the state will use all available levers to mitigate the impact of rising fuel and grain prices on consumers, FairPlay believes that removing VAT from chicken is one of those levers.

Francois Baird and Katishi Masemola of the Food and Allied Workers Union march for jobs.
Francois Baird and Katishi Masemola of the Food and Allied Workers Union march for jobs.

In 2018, a VAT-free chicken proposal was turned down by government and FairPlay now says that it should not happen again.

Praising the country’s Poultry Master Plan, Baird adds that it will increase local production and remove dependency on imported chicken.

“The master plan aims to curb dumped imports and stimulate local production to serve expanded local and export markets. It plans a steady increase in production, and the creation of nearly 5 000 local jobs, of which 1 365 jobs have already been added.”

ALSO READ: Chicken import tariffs are walking a thin line

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Tags: Chicken importsFairplay MovementFrancois BairdSA poultry industry
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Zolani Sinxo

Zolani Sinxo

Zolani is an award-winning journalist and holds a National Diploma and a B Tech in journalism, he is a journalist at heart with a particular interest in developmental journalism, politics, African development stories, environment, and global and national current affairs. He started to develop an interest in writing and storytelling at a young age after he co-authored a folk tales children’s book in 2005 titled Our Stories, Amabali Ethu. After graduating, Zolani worked at various government institutions where he worked in the marketing and communication departments specialising in media liaison and editorial management. His passion for developmental journalism saw him being a co-founder of a community newspaper in Stellenbosch, Umlambo News. He has also worked for the Group Editors as a journalist for the George Herald and is also the editor of Idinga community newspaper. Zolani loves books, especially on Africa’s politics, history, stories, and biographies of African leaders who have made a significate contribution to the continent’s socio-economic wellbeing.

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