South-Africa suspends anti-dumping duties for poultry products
The International Trade Administration Commission (ITAC) in their latest findings, recommended to the Minister that it would be appropriate to implement anti-dumping duties against the mentioned countries. The local poultry industry is sensitive to the plight of cash-strapped consumers, and understands that food price inflation can negatively impact South Africa’s population. However, poultry producers also feel that the Minister’s announcement flies against the spirit of the Poultry Sector Masterplan (Masterplan), which specifically listed tariff measures as an important pillar to put a stop to dumping. As such, the decision calls into question the trust all have invested in the Masterplan process, as the latest decision seems to demonstrate that dumping is “okay”, even if for only a period of 12 months.
The decision will not assist the country’s efforts towards localisation, job creation, transformation plans, investment or developing the rural economy. In fact, it may actively cause harm and will certainly disrupt industry investment plans for the foreseeable future.
The Minister attributes the suspension on the implementation of the anti-dumping duties against the aforementioned countries on rising food costs, and the potential impact on poultry prices.
Rising food prices in South Africa (and globally) are being driven by global fundamentals in the soft commodity markets (most notably high Brent crude oil prices, demand on corn for ethanol production in the US, global weather phenomena, global supply and demand dynamics, and more importantly, Russia’s war in Ukraine that has led to lower levels of production in Ukraine and the inability for that country to export their crops – negatively impacting global coarse grain prices).
The South African Poultry Association firmly believes that it is a misnomer to think the lack of anti-dumping tariffs will assist the consumer; the Minister’s announcement merely provides the importers a reprieve for 12 months, and any “cheap” chicken imports simply goes into the pocket of the importer as healthy margins. No evidence exists that dumped chicken is sold by the importers at a low price to the consumer, and once again the importers will capitalise on the opportunity by actively participating in unfair trade practices.
Already, total poultry imports exceed the volumes produced by South Africa’s largest local producer. Dumping creates a nice revenue stream for global producers elsewhere in the world looking to get rid of their secondary poultry cuts, and creates jobs in other countries. Dumping doesn’t help South African consumers or farmers, according to tha association, in fact, dumping can jeopardise food security.
The local industry is currently subsidising poultry selling prices as the inability to fully recover record high feed input costs, fuel and energy costs erodes margins in a market characterised by record levels of unemployment and dwindling disposable income. One of the primary objectives of the Masterplan was to increase the level of locally produced chicken in consumption figures, and reduce the level of poultry imports to an acceptable level. To date, the industry has invested Rand 1.5 billion in expanding local processing capacity in support of the Masterplan. This investment in South Africa’s Agri-processing sector has seen the industry create more than 1,500 new jobs in support of the local economy. Emerging farmers have spent more than Rand 600 million to build new farms to support the increase in capacity at a time when input costs are against the industry on the back of global macro-economic issues. Unfortunately, not all the available new capacity has been filled with chicken volumes, and the suspension on the implementation of the anti-dumping duty now threatens the industry as capacity will stand idle.
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