Nonprofit trade movement FairPlay founder Francis Baird has reiterated the importance of curbing chicken imports into South Africa, stating that a reasonable imposed tariff will level the playing field in the domestic chicken market.

This was in response to Emerging Black Importers and Exporters South Africa’s (Ibiesa's) call on government, last week, to stop an application by the South African Poultry Association (Sapa) to increase import tariffs on chicken to 82%.

Ebiesa wants the Department of Trade, Industry and Competition to complete and implement a master plan for the poultry industry before any decisions are taking regarding import tariffs.

The department said it would announce a decision on the chicken tariffs by the end of August. 

Ebiesa chairperson Unati Speirs said raising tariffs before the industry plan was done was “putting the cart before the horse” and showed that there was no “genuine intention” to remedy the industry’s current challenges, which included a failure to transform, a refusal to invest and grow to meet local demand and failure to develop a poultry export programme.

She added that increasing the existing tariffs on imports would not fix the real sources of the industry’s problems.

Baird, however, claimed that Ebiesa had “left a trail of inaccurate assertions that failed to inform the public of the true state of affairs”.

Mkabayi Group director and Ebiesa member Nontwenhle Mchunu last week said the issue should not be about choosing between local production and imports, but finding a policy balance that supported both.

Solidaridad South Africa MD and agribusiness consultant Mandla Nkomo agreed, saying that South Africa was not ready to eliminate imports through the imposition of a “prohibitive” 82% tariff. He added that South African producers were only able to produce 70% of the chicken required to feed the country’s demand.

“Why destroy jobs created by imports when local production has not improved to substitute these imports? Over the past 15 years, the local industry has failed to invest to meet local demand. The entire feed and genetics pool for chicken is controlled by the four big poultry producers, to the detriment of small local producers,” said Nkomo.

Baird, on the other hand, said imports were damaging the local industry, contributing to job losses and a contraction in the industry as a result of ever-increasing chicken imports.

He referred to chicken being dumped in South Africa at below production cost, especially from Brazil.

“A favourite argument of importers is that the local industry can meet ‘only 70%’ of local demand. This is actually a brazen insult by importers who have managed to grab 30% of the local chicken market, thanks to practising predatory trade with near impunity, pushing small producers out of production, allowing importers to grab a bigger market share than any one of South Africa’s large chicken producers.

“The only reason why South African producers still have 70% of the market is because they are among the world’s most competitive producers. Excluding mechanically deboned meat, which South Africa does not produce in large quantities, chicken imports in 2018 totalled just under 384 000 t.

“This is chicken that created no South African jobs in production, or in the maize and soya industries which provide substantial amounts of poultry feed, but instead supported jobs [abroad],” explained Baird.

He added that, “rejoicing in their 30% market heist, import supporters then add insult to injury by actually berating the local industry for ostensibly failing to invest and expand”.

Baird said most local producers had spare capacity to produce more chicken, but import surges had forced them to sit on their potential.

“Thirty thousand local jobs can be created by largely replacing imports with local production.”

Relating to price increases for the consumer, Baird pointed out that it was untrue that a tariff increase would lead to price increases for the consumer.

“The increase being sought does not affect the European Union, which has duty-free access to the South African market, or members of the Southern African Development Community.

“It also will have no effect on the price of locally produced chicken. The main target of the application is Brazil, which now dominates chicken imports into South Africa and against which the local industry is investigating dumping charges,” said Baird.

He continued, stating that importers created the myth of a supposedly monopolistic local industry.

“Again, it ignores the fact that the industry crisis has been precipitated by predatory imports, which is why the industry has applied for tariff protection as it is entitled to do under World Trade Organisation rules. They ignore the thousands of small-scale farmers under threat and the progress already made with transformation in the South African chicken industry.

“The purpose of the tariff application is precisely to crack down on unfair trade in terms of these rules and to allow the local industry to invest and expand, including into export markets. This includes those thousands of small-scale black producers, who have been among the hardest hit by imports that force them out of business,” Baird lamented.