Johannesburg - The intervention by the Department of Trade and Industry to control the import and dumping of chicken products from other countries yesterday left parties at odds about how the new tariff regime would affect different industries.
Even though the department levied the maximum tariff of 82 percent, as set by the World Trade Organisation, for “whole bird” chicken imports, the SA Poultry Association said the Minister of Trade and Industry, Rob Davies, had not been as bold as he could have been.
“While any relief is to be welcomed, we remain concerned that this is insufficient to stem the massive amount of imports reaching our shores that amounted to more than 175 million chickens last year, and when mechanically deboned meat is included, it equates to more than 260 million chickens,” said Kevin Lovell, the chief executive of the SA Poultry Association.
The department increased import tariffs for four other categories of poultry products, with a combined tariff increase of 8.75 percentage points.
Whole bird imports only accounted for 1 percent of all poultry imports in the past 12 months and the product is mostly consumed by higher-income households. The previous tariff was 27 percent. It was raised to the maximum because local producers had experienced a significant price disadvantage when competing with imported products.
Lovell said importers paid prices below foreign and local costs of production.
But since all the other poultry product categories classified under different tariff codes came from a whole chicken, there was a concern that South Africa could see a sudden jump in all chicken prices. “If you find people saying because the price of a whole chicken has gone up, so will the price of other products, that will be unfair pricing,” Davies said.
He said although the combined tariff rose by 8.75 percentage points, retail chicken price increases could be less.
Lovell said in most cases it would not need to be more than half of the change in the tariff. “For the carcasses and offal this means about 15c a kilogram, for bone-in portions around R1.60 a kilogram, for boneless portions about 70c a kilogram and for whole birds around R1.50 a kilogram. That is if the wholesale and retail chain do not take this opportunity to get some extra margin.”
Fast-food outlet Nando’s said the increased import tariffs might not affect it because it sourced its chicken locally. “Nando’s does not import chicken for a number of reasons, the following of which are paramount. Imported chicken would have to be frozen on delivery to stores, contrary to Nando’s philosophy of ensuring that chicken is delivered fresh. Nando’s is committed to supporting local industry and sources its chicken from local farmers where parties can monitor the ethical farming principles,” said Michael Cathie, the chief marketing officer for Nando's Southern Africa.
DA trade and industry spokesman Wilmot James said increased tariffs would raise chicken prices and, therefore, the opposition party objected to the new tariffs. “Millions of South Africans rely on chicken products for protein and we cannot allow local producers to take advantage,” he said.
Some meat importers had estimated that chicken prices could go up by 30 percent to 50 percent if maximum tariffs were applied to all poultry imports.
After the announcement, David Wolpert, the chief executive of the Association of Meat Importers and Exporters of SA, said given that the maximum tariff was only applied to a whole bird, there should be no material impact.
“We are pleased with the tariff for the carcasses because that remains the source of protein for the poor. The only thing we are disappointed in is the increase, of 20 percentage points, for bone-in portions and, with the currency depreciation, it’s a significant increase. Local prices have already gone up anyway.”
The new tariffs would apply throughout the member countries of the Southern African Customs Union.
Chicken imports from the EU’s member states were exempted from these tariffs because of the South Africa-EU Trade Development Co-operation Agreement. - Business Report