TRALAC - Trade Law Centre

US poultry exporters struggle with South Africa's empowerment provisos

Wednesday, 30 August 2017 Published: | Linda Ensor

Source: Business Day (South Africa)

US producers undershot their AGOA quota in 2016-17, as they struggled to build relationships with SA importers, many of whom lack experience and finance. 

US poultry producers nearly reached their full 65,000 ton quota of exports to SA under the Africa Growth and Opportunity Act (Agoa) in the year to end-March.

However the start to the current year had been slow, the president of the USA Poultry and Egg Export Council (Usapeec), James Sumner, said on Tuesday on the sidelines of the biggest bi-annual conference in Brazil for the poultry and pork industries.

More than 50 foreign journalists have been invited to attend the conference as Brazil tries to rebuild its reputation as a meat exporter after the scandal involving allegedly contaminated meat broke out in March.

US poultry producers received a quota of 65,000 tons of bone-in chicken portions for export to SA when Agoa was extended in the beginning of 2016.

It took some time for relationships with South African importers to be built up, so more than 50% of the quota only came in in the last three months of the 2016-17 fiscal year.

Sumner said the start to the 2017-18 year had been slow due to the delay and confusion in issuing import quotas.

In terms of the agreement reached with SA, 50% of these quotas have to be allocated to historically disadvantaged individuals.

"This has been something of a hurdle," Sumner said, though he noted that a lot had now been issued.

The problem was that these individuals lacked experience in how to handle these quotas or felt that they lacked the necessary financing.

Some of them had been working closely together with traditional South African importers. Usapeec had also participated in workshops and seminars both in SA and the US to train them, "but it has been a struggle".

Sumner said the Department of Trade and Industry had considered raising the allocation of US chicken quotas for historically disadvantaged individuals to 75% this year but then agreed to maintain it at 50%.

But even at this percentage, and with so many historically disadvantaged people applying for quotas, the situation had been difficult as it had reduced the amount of quota available to other importers, he said.

The quota agreement between the US and SA includes a growth factor based on increased annual production and consumption in SA but with the avian flu outbreak in SA, the chicken price was likely to increase and there could be increased demand for imports.

"We are going to push for additional quota but only if SA determines that it needs additional product or if consumption increases enough to justify it," Sumner said.

He believed the South African poultry industry was not doing very well at the moment, which was why it was trying to raise tariffs on more competitive imports from the European Union.

Sumner said there had been no resistance to US chicken on the part of South African consumers.

 

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