TRALAC - Trade Law Centre

South Africa: Poultry producers' war on imports has pitfalls

Tuesday, 19 April 2016 Published: | David Wolpert

Source: The Sowetan

Times are tough for South African consumers. Devastating drought and a weakened rand have pushed up the price of food.

It's becoming hugely difficult for families to put food on the table. Meanwhile, local poultry producers are again discrediting their imported competition and in turn threatening to push up prices that hurt SA consumers.

After negotiations that spanned much of last year, US president Barack Obama finally renewed South Africa's Agoa status.

And despite reservations from some critics, the deal is an important one for the SA economy, as Agoa, a gift from the US, secures tens of thousands of SA jobs, and grants local businesses continued access to US markets.

When you add these benefits to a supply of quality, competitively priced chicken to our shelves, it is a much-needed boost for our economy and a victory for consumers.

Since then, the arrival of the first shipment of US poultry on our shores earlier this year was supposed to have signalled the end of this chicken saga.

However, local chicken producers are still unhappy with the compromised deal with their US counterparts. Now they've moved on to castigating the quality and safety of imported chicken.

They do this for two reasons: because more imported chicken on our shelves hurts their market share, and competition means more competitively priced produce and greater choice for consumers.

The facts are indisputable. All chicken that is imported to South Africa must pass strict SA food safety and veterinary standards.

No bacteria-infected chicken will be allowed into the country. It is important to note that imported chicken is unbrined, unlike its local counterpart, which is swimming in salt water, and all imports are subject to compulsory veterinary testing, whereas local product operates on a voluntary testing basis.

With embattled consumers hard-pressed to put food on the table, local poultry is persistently forging ahead seeking more desperate protectionism. And, if successful this time, the poorest of the poor will suffer the worst of it.

In 2004, the European Union (EU) and South Africa concluded an agreement on trade, development and cooperation. Since 2012, the agreement has seen EU poultry arrive in SA with no import tariffs.

This has obviously been helpful in keeping the shelf price of these products lower for consumers and giving them greater choice for their chicken purchases. However, this could soon change drastically.

The South African Poultry Association (Sapa), which is obsessed with protectionism, has applied to the International Trade Administration Commission (Itac) to institute an agricultural safeguard on EU chicken. An agricultural safeguard is not dissimilar to the anti-dumping duty no longer imposed on US bone-in chicken, except that it operates in three-year cycles.

Sapa is essentially looking to institute protectionist action, in the form of a 37% import tariff on EU bone-in chicken.

Itac will take a decision on whether the agricultural safeguard will be implemented once its investigation is complete. This means that consumers could expect an increase of 25% plus on frozen chicken prices within months.

For many South Africans the potential price increase will come as a big shock, but for those familiar with the local poultry industry, it's really just more of the same; blaming imports for their woes instead of interrogating their own business models.

It is important to stress that the agreement with the EU was negotiated with the distinct aim of improving trade, yet now that this is being achieved, it runs the risk of being sabotaged.

Let us also not forget that EU chicken is unbrined and of excellent quality, maintaining the highest standards in the world.

The role of local industry should be to adopt policies and practices that protect consumers and add value to their lives. Instead their relentless pursuit of protectionist practices again comes at the expense of the poor. Surely now is not an appropriate time for such potentially damaging action. South Africans are already suffering under huge financial stresses.

 

  • -David Wolpert is CEO of the Association of Meat Importers and Exporters of SA

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