Consumers will lose if tariffs on chicken imports are removed

Head of broiler organization South African Poultry Association (SAPA) Izaak Breitenbach said the proposal by Paul Matthew, CEO of the Association of Meat Importers and Exporters (AMIE), to suspend existing tariffs and not imposing new tariffs for the next three years is superficial. interesting, but economically dangerous.

“It would have no impact on the main drivers of food price inflation, fuel and fertilizer prices, because of the war in Ukraine.

“This happened as prices were already rising due to the impact of the pandemic on global trade and the price of grain which accounts for almost 70% of input costs for poultry producers.

“What that would do is benefit the importers, their revenues and profits will have been hit by the decline in import volumes over the last three years,” Breitenbach said.

Breitenbach said the removal of tariffs poses a crucial threat to South Africa’s poultry industry, which is recovering from the damage caused by decades of unfairly priced, undervalued and predatory chicken imports.

The master plan for the poultry sector was put in place in 2019 to carry out this recovery.

“It aims to curb imports and expand local demand and local production for South African and export markets, creating nearly 5,000 local jobs.

“Already, South African poultry producers have invested almost R1,000,000,000 to create 1,268 jobs as part of their master plan commitment.

“Removing all tariffs and guaranteeing no new tariffs for three years would lead to a flood of dumped and predatory chicken imports worse than we’ve seen so far. 2018, which led to contractions and job losses, and it would happen again without tariffs,” says Breitenbach.

“The greatest impact would be felt by the small independent producers, often family businesses that are the backbone of our rural communities.

“The South African poultry industry is a R50,000,000,000 strategic national asset and industry, responsible for over 100,000 direct and indirect jobs and vital to food security.

“Endangering this globally competitive industry is not in the interests of consumers or the country. The local industry has been supplying South African consumers with safe, high quality and affordable chicken for many decades.

“If the industry were to decline or collapse, not only would thousands of jobs be lost in the poultry supply chain, but importers would be free to raise prices to whatever level they choose.

“Chicken is South Africa’s most popular and affordable source of meat protein, especially for low-income households. It is the local producers who will ensure that this continues, not the importers. »

AMIE argues that the local chicken industry is unable to meet local demand.

“What is true is that local production has been constrained by predatory imports, which have absorbed much of the recent growth in demand.

“According to the master plan, the industry has already increased its capacity. Due to the impact of the pandemic, and now the war in Ukraine, some of this capacity is sitting idle. It can quickly be used when demand increases, including replacing some imports.

The AMIE also argues that tariffs, such as the 62% increase for bone-in portions that came into effect last March, are unsustainable.

“The fact is that provisional anti-dumping duties were imposed in December because foreign producers sold portions of chicken to South Africa below their cost of production and below the price at which the product is sold on their indoor market.

“Even after the 62% tariff, landed prices from some of these countries are still lower than South African producer prices. It’s not fair trade,” Breitenbach said.

“As an exporting organization, AMIE knows the obstacles and barriers to exporting as well as we do, exports cannot suddenly be activated.

“SAPA is working with local producers and the government to solve problems and increase poultry exports.

“Progress has been slow, but we expect good news later this year. For now, the industry has made the decision to export breast meat to the European Union and the process of accreditation of South Africa for the export of cooked and partially cooked products has begun.

“This will increase the composite income of a whole chicken and position the industry to put even more competitively priced chicken meat on the plates of South Africans.

“It is evident that importers have not, to date, passed on the benefit of dumping prices to consumers and have instead priced their product at prices very slightly below those of locally produced chicken.

“Since the price of chicken is unregulated, there is no certainty that they will pass the profits on to consumers instead of pocketing higher profit margins while decimating local producers.”

Breitenbach concluded by saying that removing tariffs will only strengthen the hand of importers to gain market dominance and price power so they can drive out competition from local producers, destroying an industry while leaving South Africa’s most vulnerable suffer and all of our vulnerable consumers. supply disruptions.

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