Local poultry industry surprised by minister’s reversal on imports |
The local poultry industry is surprised that the minister for trade, industry and competition has turned against imported chicken by suspending anti-dumping duties, saying it could prove a boon for importers, but a scourge for South Africa’s second biggest job creator and the agricultural sector. sector.
While Minister Ebrahim Patel has cited high food prices as the reason for the duty suspension, the South African Poultry Association (SAPA) broiler organization says it is leaving prices at consumption unchanged and small farmers at risk.
Izaak Breitenbach, managing director of the SAPA Broiler Organisation, says the industry is surprised by the announcement of the suspension of the application of definitive anti-dumping duties against Brazil, Denmark, Ireland, Poland and Spain for a period of 12 months.
The industry was surprised because the minister showed his support for anti-dumping measures in the past and put in place provisional duties against the listed countries for a period of 6 months, which expired on June 14, 2022.
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International body found chicken dumped in South Africa
Following the implementation of the provisional duties, the International Trade Administration Commission (ITAC) sought comments from interested parties. Based on the responses received, the ITAC again found that poultry was being dumped in the South African Customs Union (SACU) poultry industry and that evidence of material injury to the industry could be demonstrated.
The ITAC recommended that it would be appropriate to apply anti-dumping duties against Brazil, Denmark, Ireland, Poland and Spain.
Breitenbach says the local poultry industry is sensitive to the plight of cash-strapped consumers and understands that food price inflation can have a negative effect on consumers.
“However, poultry producers also believe that the Minister’s announcement goes against the spirit of the Poultry Sector Blueprint which specifically listed tariff measures as an important pillar to halt dumping” .
He says that as such, the decision calls into question the confidence of stakeholders invested in the master plan process, as the latest decision seems to demonstrate that dumping is “ok”, even if only for a 12 month period.
“The decision will not help the country’s efforts in localization, job creation, transformation plans, investment or development of the rural economy. In fact, it can actively cause damage and will certainly disrupt industry investment plans for the foreseeable future. »
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Question about minister saying it’s about food prices
Industry challenges minister attributing suspension of anti-dumping duties to rising food prices and potential impact on poultry prices without first establishing a causal link between trade measures to stem the wave of dumping and the increase in the selling price of poultry.
“Rising food prices in South Africa (and globally) are being driven by global fundamentals in commodity markets, including high Brent crude oil prices, demand for maize for the production of ethanol in the United States, global weather patterns, global supply and demand dynamics and, most importantly, Russia’s war in Ukraine which has resulted in declining production levels in Ukraine and its inability to export their harvests, which had a negative impact on world coarse grain prices.
He says that SAPA firmly believes that it is wrong to think that the absence of anti-dumping tariffs will help the consumer. The minister’s announcement simply gives importers a 12-month reprieve and any “cheap” chicken imports simply go into the importer’s pocket as healthy margins.
“No evidence exists that importers are selling dumped chicken at low prices to the consumer. Once again, importers will take advantage of the opportunity by actively participating in unfair trade practices. Already, total poultry imports exceed the volumes produced by the largest local producer in South Africa.
Dumping creates a nice revenue stream for global producers elsewhere in the world who want to get rid of their secondary poultry cuts and creates jobs in other countries. Breitenbach says dumping does not help South African consumers or farmers.
“In fact, dumping can jeopardize food security. South Africa needs a healthy and sustainable poultry industry: one that grows, creates jobs, invests locally and pays its taxes on the profits generated. The country cannot import its protein needs.
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Local industry subsidizes selling prices
The local industry is currently subsidizing the selling prices of poultry as the inability to fully recoup record input, fuel and energy costs is eroding margins in a market characterized by record levels of unemployment and shrinking disposable income, he says.
One of the main objectives of the master plan was to increase the level of locally produced chicken in the consumption figures and reduce imports to an acceptable level. To date, the industry has invested R1.5 billion in expanding local processing capacity in support of the master plan.
“This investment in South Africa’s agribusiness sector has enabled the industry to create over 1,500 new jobs to support the local economy. Emerging farmers have spent over R600 million building new farms to support increased capacity at a time when input costs are hurting the industry due to global macroeconomic issues.
Unfortunately, says Breitenbach, not all available new capacity has been filled with chicken volumes and the suspension of anti-dumping duties will now threaten the industry as capacity will sit idle.
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Next step for the industry
He says the industry is considering what to do, but wants to first understand the details of the announcement, such as the level at which the duties will be charged and the final date of implementation.
“Therefore, no firm decision on the way forward has been made other than to say that the industry will actively engage with Minister Patel.”
Breitenbach pointed out that there seems to be a silver lining to the announcement which included that anti-dumping duties against Brazil and 4 EU countries will be implemented despite being suspended for 12 months. At that time, the new rights will come into effect for four years.
“Unfortunately, in the meantime, local producers believe they will have to consider pausing other ongoing investments and projects for at least 12 months, given the uncertainty that exists in the short term.”