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africa|energy|export|projects|security|sustainable|products

Poultry association says capacity built under masterplan may lie idle

3rd August 2022

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

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The South African Poultry Association (Sapa) says it is disappointed in the suspension of anti-dumping duties on certain imported chicken products, adding that the South African industry has invested R1.5-billion in expanding local processing capacity in support of the Poultry Sector Masterplan and created more than 1 500 new jobs.

Emerging farmers have spent more than R600-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 macroeconomic issues, says Sapa Broiler Organisation GM Izaak Breitenbach.

“Not all the available new capacity has been filled with chicken volumes and the suspension on the implementation of the anti-dumping duty threatens the industry, as capacity will stand idle. 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,” he notes.

Provisional duties against imports from Brazil, Denmark, Ireland, Poland and Spain for a period of six months lapsed on June 14, 2022.

Following the implementation of the provisional duties, the International Trade Administration Commission of South Africa (Itac) called for comments from interested parties and, on the responses received to the essential facts letter, Itac once again found that poultry is being dumped into the South African Customs Union (SACU) poultry industry, and that evidence of material harm to the industry can be demonstrated, says Breitenbach.

He adds that Itac, in its latest findings, recommended to Trade, Industry and Competition Minister Ebrahim Patel that it would be appropriate to implement anti-dumping duties against the above-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, which specifically listed tariff measures as an important pillar to put a stop to dumping.

“The decision [to suspend anti-dumping duties] will not assist the country’s efforts toward localisation, job creation, transformation, investment or developing the rural economy. It may actively cause harm and will certainly disrupt industry investment plans for the foreseeable future.

“Local producers feel they will have to consider suspending further investments and projects in the pipeline for at least 12 months, given the uncertainty that exists in the near term,” Breitenbach says.

Dumping does not help South African consumers or farmers and can jeopardise food security, he adds.

“A healthy sustainable poultry industry is what South Africa needs, namely one that grows, creates jobs, invests locally and pays taxes on profits generated. The country cannot import its requirement for protein. 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.

“Minister Patel 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, but causal link between trade measures to stem the tide of dumping and rising poultry selling prices must be established first.

“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. Food prices are also rising owing to Russia’s war in Ukraine, which has led to lower levels of production in Ukraine and the inability for that country to export its crops, negatively impacting global coarse grain prices,” Breitenbach points out.

Sapa firmly believes that it is incorrect to think the lack of anti-dumping tariffs will assist the consumer. It says Patel'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 margins.

“No evidence exists that dumped chicken is sold by the importers at a low price to the consumer and, once again, 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,” Breitenbach notes.

“The decision calls into question the trust all have invested in the Masterplan process. The industry is considering any remedies open to it, but, before understanding the details of the announcement, such as the level at which the duties will be imposed and the definitive date of implementation under the auspices of the 12 months announced on August 1, 2022, no firm decision on a way forward has been made, except to say that the industry will actively engage with Minister Patel,” Breitenbach says.

A silver lining to the announcement is that anti-dumping duties against Brazil and four European Union countries will be implemented, notwithstanding that it is suspended for 12 months, at which time the new duties will take effect for four years, he points out.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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