Last week, the Department of Trade, Industry and Competition (DTIC) announced that anti-dumping tariffs on poultry would be imposed – a year later than scheduled.
The battle of the consumer to afford a nutritious plate of food just moved into a new arena.
The anti-dumping tariffs were recommended in 2022 after an investigation by ITAC (the International Trade Administration Commission).
Controversial ITAC Report
ITAC declared that five countries (Brazil, Ireland, Poland, Denmark, and Spain) were dumping chicken in South Africa, ie, selling it to South Africa at a price lower than they would sell it in their own countries. ITAC had concluded in a controversial report that the practice was ‘harming the local poultry industry’.
Their recommendation for anti-dumping tariffs, coming on top of the general import tariff of 62%, ranged from 2% to 265% depending on the company and country concerned.
The new tariffs had been suspended for a year after DTIC Minister Ebrahim Patel announced that anti-dumping tariffs were inflationary. He added that the South African consumer had enough of a financial burden without an additional import tax.
The South African Poultry Association (SAPA) has been waging a campaign ever since to get the tariffs re-instated.
Last week, the DTIC published the tariffs with immediate effect, a move lauded by SAPA as a triumph against predatory trade and a lifeline for the struggling local poultry industry.
However, this victory may not be as straightforward as portrayed by SAPA and FairPlay.
Tariffs: No Unconditional Right to Increase Prices
Minister Patel has emphasized that these tariffs do not grant local producers an unconditional right to increase domestic prices and boost profits. There are concerns that the imposition of tariffs could result in price hikes, placing an additional affordability burden on lower-income consumers.
Additionally, it seems that SAPA’s celebration of the tariff decision as a rescue for the 2019 Poultry Master Plan (PMP) is misguided.
Obsolete Poultry Master Plan
The Poultry Master Plan (PMP) has largely become obsolete and replaced by the 20 22 Agriculture_and_Agro-processing_Master_Plan.
The PMP’s objectives, such as expanding local production, increasing domestic demand, expanding exports, and enhancing compliance, have largely remained unachievable.
Surprisingly, chicken has the potential to no longer be consistently the most cost-effective protein option for consumers with limited financial resources, leading to a decline in domestic demand.
Competing For a Place
Alternatives such as pork, eggs, and tinned fish are now competing for a place in the lower-income food basket. Export efforts have also encountered obstacles due to producers’ reluctance to expand into international markets, given the high demand for local products.
Poultry producers have long predicted this downfall due to imports, power cuts, high input costs, avian influenza, and other challenges. Their warnings are tempered by the fact that many of them still report substantial annual profits.
Despite claims that import tariffs will protect against unfair trade practices and only slightly increase consumer chicken prices (by approximately 3%), this slight increase could be enough to steer consumers towards other protein sources such as tinned fish, eggs, and pork.
Reintroduction of Anti-Dumping Tariffs
The reintroduction of tariffs may pose a multifaceted challenge for major poultry enterprises, with potential ramifications for consumers.
It is recommended that elevated poultry costs could potentially result in a reduction in demand, as consumers may explore alternative protein options.
While the effects of this resolution remain unclear, it is crucial to contemplate the potential impact on consumer conduct and the poultry industry’s dynamics. Consequently, it is imperative to closely observe the situation to gain a comprehensive understanding of the decision’s implications.
Only time will tell, and ChickenFacts will be watching.