Chook to the system: no sign of chicken tariff hike amid call for help
Higher import tariffs will batter an already struggling poultry industry, warns consumer organisation
An association advocating for consumer interests has urged the government to consider other measures to assist the embattled poultry industry instead of hiking tariffs on chicken imports.
The SA National Consumer Union (Sancu) said at the weekend that hiking tariffs invariably results in price increases across the board as local producers cash in on the reduced competition.
SA’s poultry sector has shed thousands of jobs and blames its demise on cheap chicken imports from Brazil, the US and Europe. This has brought it into conflict with SA meat importers, who blame the lack of competitiveness of the local poultry industry for its woes.
“[We have] in the past expressed opposition to any increase in tariffs on chicken imports and continue to do so,” Clif Johnston, Sancu vice-chairperson, told Business Day at the weekend.
Johnston said tariffs are a form of market protection and increasing them will result in a spike in chicken prices.
“Because chicken is one of the cheapest sources of protein, the poorest of the poor rely extensively on it and are unable to absorb price increases. When prices increase, they simply have to eat less,” he said.
SA is expected to hike tariffs on poultry imports any time from now after an application by the SA Poultry Association (Sapa), which represents commercial broiler producers and associated breeder farmers.
The best thing the government can do to cushion the effects on consumers is to help local producers become more competitive globally.Clif Johnston, Sancu
Trade and industry minister Ebrahim Patel agreed to the new levies late in 2019. President Cyril Ramaphosa said during his State of the Nation address on February 13 the state will introduce the new poultry import tariff to support the local industry by the end of the following week. However, there has been no update since then and the department of trade and industry did not respond to questions at the weekend.
In its application to the International Trade Administration Commission (Itac) – the organisation tasked with customs tariff investigations, trade remedies and import and export control – Sapa called for an increase in the ad valorem tariff on bone-in and boneless frozen chicken portions to 82% from existing levels of 37% and 12%, respectively.
‘Help, don’t hike’
Johnston said Sancu recognises that the government has to balance the interests of producers and consumers, but as the consumer body’s role is to highlight the plight of consumers, “especially the 18 million recipients of social grants who depend heavily on chicken as their main source of protein and who cannot afford the inevitable price increases resulting from increased tariffs”.
He said: “The best thing the government can do to cushion the effects on consumers is to help local producers become more competitive globally and ultimately do away with the need for any tariffs. Sancu understands there are steps being taken in that direction.”
FairPlay, an organisation that aims to fight predatory trade practices and dumping, has said it is incorrect to say hiking tariffs will inevitably lead to higher chicken prices.
Francois Baird, the founder of FairPlay, recently stated that imports now comprise 30% of the SA market.
“That means 70% of chicken supply comes from local producers and is unaffected by the tariff application. Tariffs would not add one cent to the price of local chicken. The tariff application does not apply to all of the 30% of imported chicken. It excludes the EU, already subject to a lower tariff, the US, which has a separate duty-free allocation as part of the Agoa [African Growth and Opportunity Act] trade agreement, and neighbouring African countries who are members of the Southern African Customs Union.”