Chicken meat is one of the most sought-after sources of protein, and Mzansi imports a lot of it. Senior economist Dr Moses Lubinga takes a look at how chicken meat imports have affected the poultry industry in South Africa.
Between 2011 and 2020, South African poultry imports increased by 41%, but in some years like 2016, 2017 and 2019, the increase ranged between 57% and 65%. The poultry industry contends that chicken meat imports are negatively affecting domestic production.
Frozen bone-in portions of fowls of the species Gallus Domesticus (chicken) are the major poultry products of concern, supplied by largely by European countries (Germany, the Netherlands and the UK) and Brazil.
In 2013, the poultry industry officially took note of the surge in imports. It lodged a complaint claiming that European countries were dumping chicken products on the South African market, thereby constituting an imposition of temporary safeguarding measures (i.e. an anti-dumping duty), ranging between 22.03% and 73.33%, depending on the country supplying the chicken portions.
The provisional anti-dumping duties took effect between July 2014 and January 2015 as further investigations into the matter were ongoing. Upon validating the existence of dumping by some EU countries, South Africa took a bold stance to impose anti-dumping duties on frozen bone-in chicken portions.
Following a successful investigation into the matter, anti-dumping duties on frozen chicken bone-in portions originating in or imported from Germany, the Netherlands and the UK were imposed, and this came into effect in early 2015.
Since then, the anti-dumping duties have been adjusted, as illustrated in the figure below. Against this backdrop, this article provides insights into how chicken meat imports affect the poultry industry in South Africa.
Effect of chicken imports on domestic production
There have been numerous claims that imported chicken products are negatively impacting the productivity of the domestic industry.
The figure below presents a graphical illustration of the relationship between the volume of chicken imports and domestic production, showing a negative relationship between chicken meat imports and domestic production.
However, despite the imposition of anti-dumping duties in 2014, there was an even more drastic increase (43%) in chicken meat imports until 2016, attributable to the prolonged drought that affected the feed industry in Southern Africa in general.
While anti-dumping duties are only imposed on chicken parts, the graph includes all chicken products (fresh or frozen), irrespective of the country supplying the product. This graph provides a meaningful comparison with the production capacity of the domestic industry.
Imports exclude re-exports of chicken meat products and live fowls of the species Gallus Domesticus (chicken) weighing less than or equal to 185 grams (HS 010511), since these are chicks for breeding stock.
Since 2015, re-exports of frozen chicken cuts and edible offal and frozen chicken, not cut in pieces, have generally been increasing, except for 2019 and 2020 when drastic declines of 263% and 695%, respectively, were observed.
These declines are attributable to the disruptions in supply value chains due to the Covid-19 pandemic. However, on average, 485.6 tons and 552.8 tons of frozen chicken cuts and edible offal and frozen chicken, not cut in pieces, have been re-exported since 2016.
Thus, existing data suggests that not all the frozen bone-in chicken portions imported through South Africa’s borders are consumed within the country. Major countries to which frozen bone-in chicken portions are likely re-exported include Mozambique, Lesotho and Namibia.
Interventions required to curb imports
To complement the graphical approach, correlation analysis was also used to ascertain the nature and strength of the relationship between imports and domestic production.
When considering the period 2011 – 2020, the findings suggest that there is a moderate but positive (0.56) relationship between imports and domestic production. The implication is that as imports increased, domestic production also increased, but possibly to a lesser extent than it should have.
This also implies that consumer demand was high for chicken meat products, not forgetting that some products were also re-exported. However, correlation analysis for the period during which anti-dumping duties were in effect (2014-2020) reveals a weak and negative (-0.16) relationship between chicken meat imports and domestic production.
This means that as domestic production of chicken meat declined marginally, chicken meat imports increased, with the reverse also being true. Therefore, consumer demand and re-exports play a key role in influencing imports and domestic production.
Imports of chicken meat have been increasing significantly in Southern Africa because it is a highly sought-after protein source. While the domestic poultry industry claims that chicken meat imports, especially frozen bone-in portions, negatively affect their productivity, there is a very weak association between them.
If the domestic industry produced sufficient volumes to meet the demand in local and export markets, the observed increasing imports trend might drop significantly. Therefore, it is recommended that the poultry industry focus on interventions to bolster production to meet the demand, or else, imports will continue regardless of safeguard measures.
Interventions may include facilitating the full participation of previously disadvantaged small-scale farmers into the formal market structures. Facilitation might take different forms including access to land, training, as well as construction of basic production infrastructure.
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