TRALAC - Trade Law Centre

South African poultry shares fall on US chicken deal

Monday, 08 June 2015

Source: Moneyweb (South Africa)

South African poultry producers’ shares fell on Monday after Pretoria reached a deal to open the country to US chicken imports, threatening the firms’ grip on a 2 billion kg-a-year market.

Poultry producer Astral Foods fell 4.05% while Quantum Foods Holdings dipped 3.30%.

At 36.4 kg per capita in 2013, according to data from South Africa’s Poultry Association (SAPA), the country is Africa’s top chicken consumer and number four in the world, making it a lucrative target for global producers.

The ending of 15 years of punitive duties on US chicken imports on Saturday will allow an initial 65,000 tonnes a year into South Africa, with one analyst saying the move effectively introduced another player in the market.

Local producers have long cried foul over cheap imports by overseas firms dumping bone-in portions, popular locally but generally considered undesirable by consumers in the US andEurope.

Under Washington’s African Growth and Opportunity Act (AGOA), which is up for renewal in late 2015, as much as 90% of South Africa’s exports can enter the United States duty-free.

Poultry industry leader Astral warned in May that if a quota on US poultry imports was agreed on the back of the AGOA renewal, it was likely to negatively impact local producers.

However on Monday the company said the deal, which should help smooth AGOA talks, was acceptable.

“Sanity prevailed where we were able to protect the poultry industry from untenable levels of US bone-in-chicken imports,” its chief executive Chris Schutte said in a statement.

The South African Poultry Association said small producers would be hardest hit.

“There is no doubt that allowing dumped US imports into South Africa will affect our industry,” chief executive Kevin Lovell said.

“But we believe that AGOA is worth it for South Africa.”

In 2014 chicken from the US accounted for roughly 1.5% of total imports into a South African market dominated by Brazil and the EU.

 

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