Tariffs on imported chicken suspended

SA should see a reduction in poultry prices, depending on producers’ reaction to this announcement: Paul Matthew – CEO, SA Association of Meat Importers and Exporters.

FIFI PETERS: The South African Meat Importers and Exporters Association is describing the suspension of anti-dumping duties on chicken imports as a major win for cash-strapped consumers. The suspension of the tariffs essentially means that chicken that comes from Brazil, Spain, Poland, Ireland, and Denmark can enter South Africa without the additional cost of paying the duty.

To tell us exactly how consumers will benefit I’m joined by Paul Matthew, the CEO of the South African Meat Importers and Exporters Association. Paul, thanks so much for your time. You’re saying this is a major win for me and the listeners, and for all other consumers out there who enjoy their chicken. How so? What is this ultimately going to mean for the price that we pay for chicken?

PAUL MATTHEW: Evening, Fifi. Yes, as a South African consumer I think it’s a huge win for us. But let me just take a step back and explain how this all works. Obviously there’s been an anti-dumping investigation on Brazil, Spain, Poland, Ireland and Denmark. What has happened now is that the minister has put a hold on any tariffs or duties applied to those countries under the anti-dumping [regulation].

Read: Provisional anti-dumping duties imposed on chicken imports

What we need to understand, though, is that in March 2021 on all frozen bone-in chicken there was a 62% tariff that was applied. So this anti-dumping tariff would’ve been over and above that 62%.

So what actually happened? If you take the 62%, and let’s just say there was a further 17% anti-dumping duty, it means it takes it up to 79%.

It means that the local producers can take their price leaving the factory and they can up this price by 79%.

That’s why we always fight these applications, because it just allows protection [for] the local poultry guys to up their prices.

So what will happen now is that the South African consumer is not going to have this additional terrible tariff or duty applied now for the next 12 months. So we, as South African consumers, most definitely should see – I emphasise should see – a reduction in poultry prices.

FIFI PETERS: The word ‘should’ opens up room for doubt – it should, but may also not happen. So why use the word ‘should’ instead of ‘will’?

PAUL MATTHEW: Fifi, I mean already the local producers, just a day after Minister [of Trade, Industry and Competition] Ebrahim Patel’s announcement, have [indicated] in the press that obviously there are infrastructure issues around the electricity, there are issues around water. And they have been saying for quite a time now the issues around the Russia-Ukraine war and the supply of grain.

So they’ve always got an issue to fight government with, to justify the increase in their prices. So what I’m saying, and [why] I use the word ‘should’, is theoretically we should no doubt see a reduction, but they’ve already started planting the seed, their narrative being there are other issues and [we should] expect an increase in poultry [prices] – which is odd because it all just comes back to the profits and obviously profits to the shareholders.

So it’s going to be very interesting to see how the local producers react to this announcement and what they do over the next couple of weeks to support the South African consumer because we need it.

We’ll have a slight reduction hopefully this month in fuel, we really need a reduction in the protein that is most commonly purchased by South Africans. Let’s see what they now bring to the party.

FIFI PETERS: You’ve spoken about the expected benefits for consumers. What could this mean for some of your members?

PAUL MATTHEW: Well Fifi, our industry is suffering, so there’s not much of a benefit for our members. If you just have a look, ever since the 62% tariff, the bone-in [chicken] market that filled the gap from the local market, which the local market couldn’t produce, is really 37% down from 2020 to the end of 2021. And already the year-on-year comparison – between January 2022 and last year to the end of June – on whole birds and on bone-in chicken is really between 37% to 28% down.

So I really don’t see the huge benefit for our members. Also understanding that Spain, Poland, Ireland and Denmark have been closed because of AI [Avian Influenza] or the whole of Europe is closed because of AI. So trade is really down. So as an industry we have been suffering. It’s not only in poultry – it’s been in the meat imports as well. So it’s not in our favour at all.

FIFI PETERS: You mentioned the fact that you’ll be watching quite closely how the local manufacturers react to the suspension of the duty over the next couple of weeks. So let’s talk about scenarios here. Let’s talk about a scenario in which the expected decline in price doesn’t happen. What then are your next steps?

PAUL MATTHEW: Well, I think in terms of our discussions with government on tariffs and including Itac [the International Trade Administration Commission investigation into the matter being] over, I think as an association, as an industry, we also want to get into the detail of this investigation, because I think it’s time to show the South African public that the local producers, all they do is seek protection the whole time for their shareholders.

One’s got to ask: is there any material injury justification [to what] the local poultry guys have been saying, that imports have been harming their business?

And has Minister Patel – because as an industry we asked for a moratorium of three years on tariffs – has he just used to sort of benefit government in terms of their message to the public?

So we will have a look into this in more detail, obviously, but it’s going to be interesting to see what the local guys will do now in terms of their message to government about seeking protection and, you watch, it’s going to be around infrastructure, price of electricity, the water lack – because now they can’t play the import card as they usually do.

FIFI PETERS: Just lastly, this suspension applies for 12 months – is that correct?

PAUL MATTHEW: That is correct. Yes.

FIFI PETERS: So what happens after that?

PAUL MATTHEW: We need to have a look at the report that Itac has presented to Minister Patel, and then we need to have a look what recommendations they’ve made in terms of duties. But theoretically what would happen is that after 12 months … the minister will introduce those tariffs. But we’ll look into that and we’ll have to wait 12 months to see if this falls away – or if the local economy hasn’t recovered at all, hopefully we can talk to Minister Patel for an extension on this. But we’ll have to look at that over the next couple of months.

FIFI PETERS: All right, Paul, thanks so much for your time. Paul Matthew is the CEO of the South African Association of Meat Importers and Exporters.

We did reach out to Astral Foods for their take on the announcement of the suspension. I believe they weren’t available this evening. Perhaps we can get their side of the story in the coming days.

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There was a guy on radio today predicting how now chicken prices will come down because SA producers won’t just add the duty to their selling prices. I am not holding my breath. This whole thing is stupid. Brazil and American producers make good money selling white chicken meat, enough that they can sell the rest of the chicken for scrap prices to SA.

Basically it means they can sell the other bits to SA for less than what JUST the input feed cost per kg of chicken is for our local producers, and our feed is not expensive. That is perfect definition of dumping.

This is not going to end well – keep an eye out for more chicken houses converting to self-storage near you. Maybe 1% of the former workers will get a job keeping the yards clean…

End of comments.

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