JOHANNESBURG: Trade and Industry Minister Rob Davies, who recently increased tariffs on imported chicken portions, says the state is aware of the crisis facing the poultry industry and is tackling it on various fronts. The minister in December approved a provisional 13.9% safeguard duty on imported European bone-in chicken in terms of SA’s economic partnership agreement with the EU. The latest duty comes amid a further comprehensive probe by the International Trade Administration Commission (Itac). Davies on Sunday said that his department was aware of the influx of bone-in chicken portions, particularly from the EU and Brazil and was considering designating chicken as one of the products which government departments and state entities would be required to procure locally. The department has a dedicated unit focused on the poultry industry.
The Department of Agriculture, Forestry and Fisheries, on the other hand, is involved in a number of projects to support local producers and to provide feed for the poultry industry. The South African Poultry Association (Sapa) applied for a 37% safeguard duty on European bone-in chicken imports in 2015 and the association’s CEO Kevin Lovell on Sunday insisted that the 13.9% duty granted by Davies was inadequate, far too late and would not work. If it was not increased, the effect on the industry — which is already in the process of closing plants and retrenching workers — would be devastating, he said. Lovell said the association would be making further representations to Itac to support its case that the domestic industry needed to be protected from European imports which prior to the 13.9% safeguard duty came in at zero duty and at prices way below the cost of local production. A 37% duty would make the playing field more equal. He noted that the EU supplied about 80% of all of SA’s bone-in chicken imports in 2016. Out of the total poultry imports of about 530,000 tonnes, about 230,000 tonnes were bone-in chicken portions.
Major chicken producers such as RCL Foods (which owns Rainbow and Farmer Brown chicken producers) and Country Bird are struggling to maintain their profitability in the face of the import onslaught and have or are planning to reduce their operations. Together they plan to retrench nearly 3,000 workers while other producers have had to shut up shop. Both producers and the Food and Allied Workers’ Union have called on the government to act. The drought, which pushed up the price of chicken feed, contributed to the industry’s woes, which RCL Foods CEO Miles Dally has described as an “unprecedented crisis”. Lovell said seven of the 10 European countries that export chicken to SA had, in November and December, been hit by bird flu, leaving only Belgium, Spain and Ireland exporting to SA. He said European consumers ate the white breast meat portions of the chicken and that the brown meat such as leg quarters were exported as a byproduct at below-cost prices. Itac processes are by their nature time-consuming as it has to investigate in-depth and with quantitative backing whether an application for a tariff increase is justified in terms of the effect that imports are having on a local industry.
