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- Trade tariffs on imported chicken are due for a hike in South Africa from August.
- This comes after the minister of trade and industry agreed with the ITAC that various companies across Brazil, Denmark, Poland, Spain, and the US are dumping poultry products in South Africa.
- One poultry expert argues that the implementation of the duties will impact consumers more than anything.
- For more stories, visit the Tech and Trends homepage.
Following a year-long reprieve, trade tariffs on imported chicken are expected to be implemented in August, and consumers will feel the pinch the most.
This comes after the International Trade Administration Commission’s (ITAC) investigation concluded that producers in Brazil, Denmark, Ireland, Poland, and Spain have been dumping poultry products in South Africa, causing material harm to the local poultry industry.
Managing director of South African food distributor Hume International, Fred Hume, said his organisation is not taking a combative stance against the tariff hike, but is worried it will affect customers and the industry itself.
“We’re going to see significant shortages on shelves. We’re going to see price increases that are going to affect the consumer, there’s no doubt about that. We’re not taking a combative stance against that industry. I believe that they’re facing significant challenges of their own.
“We all know about the well-documented load shedding that’s adding a significant layer of cost which is something we can’t do much about, but all of that doesn’t help the consumer who’s ultimately going to pay the price of these tariffs,” he said.
Impact of postponing duties
Previously, provisional anti-dumping duties were imposed on the five countries from December 2021 to June 2022.
These duties were meant to be followed by permanent anti-dumping tariffs, but Trade and Industry Minister Ebrahim Patel agreed with ITAC’s recommendations in August 2022 to delay their permanent implementation for 12 months due to consumer cost concerns.
In a statement released in July, the South African Poultry Association (SAPA) said suspending the tariffs once again will have a negative impact on the country’s poultry industry.
The association believes suspending the tariffs again will likely have a costly outcome for South Africans and impact the county’s poultry industry – a strategic national asset of R59 billion.
“It’s these anti-dumping duties that allow us to grow the industry, to invest more, to create more jobs – we’ve created more than 4 600 jobs throughout the value-chain since Covid, and we’ve invested over R2.1 billion in the local industry, with another R600 million coming online by the end of 2024.
“But we’re only able to do all these things as signatories to a master plan that encourages the use of trade measures that would defend the local industry from predatory trade practices, like dumping,” said GM of SAPA, Izaak Breitenbach.
Where duties will be and what that means
If the tariffs are implemented, the result will be a maximum anti-dumping duty of 265% on chicken imports from Brazil. This will be added to the 62% tariff currently in place – which, according to Hume, accounts for more than half of South Africa’s imported frozen chicken.
The revised duties will also include an added tariff of 158.4% on imports from Ireland; 96.9% on Poland; 85.8% on Spain; and 67.4% on Denmark.
Hume argues that the duties will do more harm than good as dumping practices impact local poultry producers' ability to compete in the local market.
“Imported chicken leg quarters – an extremely popular cut in South Africa – are already landing at a cost of over R35 per kilogram, including duties. By contrast, locally-produced individual quick frozen (IQF) chicken is being sold to local wholesalers at approximately R25 per kilogram. In other words, local producers have a clear advantage against international competitors.
“Finally, calculations should specifically consider whole birds and bone-in portions, which attract import duties of 82% and 62% from Brazil and the United States, respectively. These duties are collected by the government before the goods become eligible for sale in the local market and are subsequently added to importers’ costs,” said Hume in a statement.
Although the implementation of the duties is highly likely as opposed to a postponement, Hume believes that another delay is plausible and won't cause much harm to the economy.
“We’ve lobbied quite extensively to have the temporary reprieve that the minister gave last year, I guess, as a weapon to combat rising food inflation. We were very hopeful that these anti-dumping duties would either be done away with or the implementation would be suspended for a further 12 months.
“This does place us in a bit of a predicament. As a country, South Africa imports more than 500 000 metric tons of animal protein annually, and we already are faced with the significant risk that Brazil could close any day because of bird flu,” Hume told New24.
This story has been corrected to reflect that the trade tariff hike on imported chicken has not been gazetted yet.
