THE South African Poultry Association has asked the International Trade Administration Commission to impose an agricultural safeguard on some European chicken products that can enter the domestic market duty-free.
The application has drawn the ire of meat importers, who argue local poultry producers are acting against the best interests of consumers. If the application were approved, provisional safeguard tariff duties of 37% would be imposed on European Union (EU) chicken-in-bone portions.
In terms of the Trade, Development and Co-operation Agreement of 2004 between SA and the EU, chicken can be imported duty-free.
Last year, about 156,000 tonnes of EU bone-in-chicken portions valued at R2.3bn were sold on the South African market. Total imports amounted to 192,390 tonnes, showing that the bulk came from the EU. The duty-free regime kicked in in 2012, when 112,629 tonnes of EU bone-in chicken portions came into SA, compared to 62,271 tonnes the previous year.
In addition to this sharp increase in EU bone-in-chicken imports, local poultry producers have to contend with annual imports of 65,000 tonnes of US bone-in-chicken free of the antidumping duty that prevailed prior to the agreement reached this year between the US and SA.
Concluding this agreement was a condition for continued duty-free access for South African agricultural products to the US under the Africa Growth and Opportunity Act.
The SA-EU agreement provides that provisional agricultural safeguards can be imposed if the local industry can show that the imports are causing a “serious disturbance” to the local poultry market.
The application for a safeguard has to demonstrate that exceptional circumstances exist and be substantiated by facts relating to the rate and volume of the increase in imports and their harmful effect on local prices.
South African Poultry Association CEO Kevin Lovell said on Tuesday the local industry was facing low prices, dramatically rising input costs and a “relentless flood” of cheap imports.
However, Association of Meat Importers and Exporters SA CEO David Wolpert accused local poultry producers of protectionism and blaming imports for their woes instead of examining their business models.
He estimated that chicken prices would rise 25% to 37% if a safeguard was imposed. This would have much the same effect as an antidumping duty except that it would operate in a three-year cycle.
“The South African Poultry Association is essentially looking to institute protectionist action, in the form of a 37% import tariff on EU bone-in-chicken,” Mr Wolpert said. “Efforts to institute tariffs on imported meat from the EU will directly compound existing economic pressures on SA’s poorest consumers.”
Mr Lovell rejected the accusation that local producers were uncompetitive, citing a Dutch study that showed that EU poultry production costs were much higher than those in SA and other parts of the world.
“It is also noteworthy that SA has no access to EU markets since their duty-free quota is not available to us; we would pay a duty of more than R15 per kilogram for boneless cuts.
“South African producers have encountered growing trade protection in export markets, with Namibia for example and the US, which continues to use spurious arguments around phytosanitary issues and avian influenza to prevent access by South African chicken,” he said.
“The 28 countries of the EU, the US and Brazil, all have a comparative advantage over South African poultry producers by subsidising either their domestic poultry industries or the essential input industries to poultry production, namely maize and soya beans. SA does not support maize farmers at all, with limited support for soya bean farmers, nor does it support its poultry meat industry.”