Agoa.info - African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/'Imported chicken is slaughtering the local industry', says South African poultry association

'Imported chicken is slaughtering the local industry', says South African poultry association

'Imported chicken is slaughtering the local industry', says South African poultry association
Published date:
Thursday, 23 June 2016
Author:
Mdu Nhlebela

Importing chicken is destroying the local poultry industry and is potentially putting 130 000 jobs at risk. 

This is the view of the South African Poultry Association, members of which voiced their concerns at the 110th Avi Conference in Kempton Park yesterday. 

With poultry imports currently at their highest level in South Africa’s history, the flood of cheap foreign chicken now accounts for 9.6% of the Southern African Customs Union’s trade deficit, weakening the rand and decimating the local poultry industry, especially small and emerging farmers, the association said.

“The fact is that there is no need to import poultry at all. Poultry does not have to be a part of the trade deficit," said Kevin Lovell, chief executive of the South African Poultry Association. 

In 2015, poultry imports amounted to a massive R4.6 billion in an industry that was among the most unprotected in the world, with applied tariff protection equating to barely a few percent a year, Lovell added.

US chicken

The South African agricultural sector and local companies were under a significant threat in March when United States chicken imports hit South African supermarket shelves for the first time in 15 years.

Not only did the chicken imports end a protracted trade dispute and ensured that South Africa would continue to receive trade benefits under the African Growth and Opportunity Act (Agoa), but these chickens were bigger than what the locals produce.

“Over the last five years, the local poultry industry has grown by just 1.7% but imports have grown by 140% once population growth is discounted,” said Lovell. 

“South Africans are eating more chicken, but most of this growth in consumption comes from imports.”

Lovell pointed out that all other adjacent industries are under threat too – the poultry industry uses 90% of soya grown locally and is second only to the consumer as the biggest user of maize. 

“More than 130 000 jobs depend on this industry. These progressively go by the wayside as imports grow. It is in the national interest to grow the industry because imports don’t use any of these grains, and take jobs rather than create them, with about 1000 jobs lost for every 10 000 tonnes imported.”

Tariffs

Lovell explained that the poultry association’s intention of reintroducing the standard Most Favoured Nation tariff of 37% on poultry from the European Union was to make them pay what everyone pays. Canada applies a tariff of 160%, while the EU’s is the equivalent of about 140%.

“The average tariff on imports last year averaged a bit more than 5%, while in 2013, this was as low as 2.5%. This low level of tariff protection is simply because the EU is excluded, and all we ask is that the EU is treated the same way as all other countries. South Africa is currently the EU’s biggest dumping ground for their waste, and imports keep going up as none of our applications have limited trade,” he says. 

“The import community is protecting its turf. Importers are not small; collectively they are bigger than our biggest producer. South Africa is one of the top 10 importers of chicken in the world as our sophisticated banking, logistics, distribution and retail sectors make it easy for foreigners to trade with us as it is relatively risk-free.”

Bones vs breast

European and American consumers prefer breast meat, so their by-products become South Africa’s imports. 

“This hurts local producers the most as South Africans prefer chicken on the bone, so that part of the chicken should be what we sell most effectively to our consumers and at a profit,” said Marthinus Stander, chairperson of the poultry association’s broiler organisation. 

“Even as these foreign producers export incredible volumes of bone-in imports, they also protect their industries in the US and the EU using phytosanitary measures to restrict our access to those markets, so we cannot sell our breast meat there while they are free to dump here. We say send your whole birds here and let’s compete fairly.” 

If South Africa had not agreed to US poultry import terms President Barack Obama might have suspended South Africa’s benefits from the policy, which provides duty-free market access to the US for qualifying South African products.

US ambassador to South Africa Patrick Gaspard said the Agoa agreement would play a huge role in the transformation of the South African economy because the embassy was working with various partners to develop new, black-owned businesses in trade.

David Wolpert, the chief executive of the Association of Meat Importers and Exporters of South Africa, said at the time: “The agreement that is being finalised means the increase in poultry prices will not be as high as was expected because there is now more competition.

“We are thrilled we no longer have to worry about losing the benefits that come with duty-free exports.”

Read related news articles

Remarks by Deputy Treasury Secretary Adeyemo on the US-South Africa economic relationship

As Prepared for Delivery in Johannesburg, South Africa Thank you for the warm welcome. I want to express my gratitude to Consul General Spera and the American Chamber of Commerce for hosting me. I am honored to be joined today by South African Entrepreneurs that are building companies to unlock the economic potential of their country.  I owe my own presence here today to the inspiration I drew from South Africa. In the middle of the...

13 March 2024

South African president Ramaphosa meets with US congressional delegation

South African President Cyril Ramaphosa today, 21 February 2024, received for a visit from a bipartisan congressional delegation from the United States of America, in Tuynhuys, Cape Town. The delegation is visiting South Africa at the invitation of the Aspen Institute. The President and the US congressional delegation discussed the importance of the relationship between South Africa and the US, which manifests in strong economic,...

21 February 2024

US congress receives Bill to review South Africa relations

A bill has been submitted to the United States congress calling for a full review of the country’s bilateral relationship with South Africa following the International Court of Justice ruling that found it plausible that Israel has committed acts of genocide against Gaza. The bipartisan bill which was introduced by US Republican congressman John James and Democratic Party congressman Jared Moskowitz this week could threaten South...

09 February 2024

Fitch research unit expects better AGOA deal for South Africa

Fitch’s research arm, BMI, believes SA has done enough to get improved trade terms under the African Growth & Opportunity Act (Agoa), which it expects to be extended and modified before its expiry in September 2025. But it warns that the deal might be stillborn if Donald Trump is elected US president. The research think-tank said in a note it assigns a 65% probability that Agoa will not only be renewed but modified to the benefit of...

09 January 2024

South Africa: BLSA CEO calls for more companies to leverage AGOA opportunities

Many more South African companies could benefit from the African Growth and Opportunity Act (AGOA), which gives eligible countries access to US markets free of tariff barriers, business organisation BusinessLeadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter. Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led...

20 November 2023

US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa

President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...

09 November 2023

US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility

Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa. That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in...

07 November 2023

AGOA benefits extend beyond trade [incl. VIDEO of Friday's opening session]

Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa. “AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods...

06 November 2023

South Africa pins its hopes on an early 2024 US Congress renewal of AGOA

South Africa’s government is hoping that the process to renew the African Growth and Opportunity Act (Agoa) by the US Congress will be concluded by early 2024, ensuring that more than 20 African countries continue to have duty-free access to the world’s largest economy.   This is the first time that the South African government has given a timeline for when it hopes the US Congress might extend Agoa, which has been renewed twice...

05 November 2023

SA trade minister Patel expresses confidence at media briefing about South Africa’s continued inclusion in AGOA

Ahead of South Africa hosting the US-AfricaTrade and Economic Cooperation Forum – also called the AGOA Forum – from November 2 to 4, Trade, Industry and Competition Minister Ebrahim Patel on October 26 briefed the media on the state of readiness for the forum, expressing confidence that the South African government’s relations with the US were strong. Various South African stakeholders have been motivating for...

26 October 2023

Business Leadership SA calls for business to capitalise on South Africa’s hosting of AGOA Forum

It is notable that South Africa will still host the African Growth and Opportunity Act (AGOA) Private Sector Forum next month, given that several US lawmakers have called for it to be moved elsewhere, and have questioned the country’s preferential trade terms with the US under Agoa as such preferential access to the US markets is open only to African countries that do not threaten American security interests. This is...

24 October 2023

You are here: Home/News/Article/'Imported chicken is slaughtering the local industry', says South African poultry association