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Local industry cry betrayal by Patel on poultry tariff suspension

Investment in South Africa’s Agri-processing sector has seen the industry create more than 1,500 new jobs in support of the local economy. Image, EPA, NIC BOTHMA.

Investment in South Africa’s Agri-processing sector has seen the industry create more than 1,500 new jobs in support of the local economy. Image, EPA, NIC BOTHMA.

Published Aug 2, 2022

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Local poultry producers have threatened to hold back investment in the sector for the period that the Department of Trade and Industry has granted a reprieve to Brazil, Denmark, Ireland, Poland and Spain by suspending the implementation of definitive and anti-dumping duties against them.

In a statement, The South African Poultry Association (SAPA) General Manager Izaak Breitenbach said the industry felt betrayed by the Minister for the decision which went against the spirit of the poultry Masterplan to limit imports to allow growth of the local industry.

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Breitenbach said to date, the industry has invested R1.5 billion in expanding local processing capacity in support of the Masterplan.

He said this investment in South Africa’s Agri-processing sector has seen the industry create more than 1,500 new jobs in support of the local economy.

He said emerging farmers have spent more than R600 million to build new farms to support the increase in capacity at a time when input costs are against the industry on the back of global macro-economic issues.

"A silver lining to the announcement is that anti-dumping duties against Brazil and 4 EU countries will be implemented, notwithstanding the fact that it is suspended for 12 months, at which time the new duties will take effect for four years. Unfortunately, in the interim, local producers feel that they will have to consider suspending further investments and projects in the pipeline for at least 12 months, given the uncertainty that exists in the near term,' Breitenbach said.

He said the industry is considering any remedies open to it, but before understanding the details of the announcement (such as the level at which the duties will be imposed and the definitive date of implementation – under the auspices of the 12 months announced on 1 August 2022), no firm decision on a way forward has been made, except to say that the industry will actively engage with Minister Ebrahim Patel.

Market monitor Fairplay, which is aligned to SAPA said the 12 month delay would negate the progress that has been made in implementing the poultry master plan, which Minister Patel has driven since he signed it in 2019.

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"By inviting Brazil and other countries to dump as much as they like in the next 12 months, Patel has left exposed the poultry producers who signed the master plan in good faith and with high hopes,' said Fairplay Founder Francois Baird.

Baird clarified that at the moment, this licence to dump applies only to Brazil, that the four EU countries – Denmark, Ireland, Poland and Spain – cannot export to South Africa because of bird flu bans.

Those bans are temporary, however, and may well be lifted long before the 12-month “duty-free” period is up.

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"The unintended consequences of Minister Patel’s poorly conceived decision are increases in unemployment and misery in already impoverished rural areas. He needs to rethink, reconsider, and reverse his decision.

If he really wants to help the poor, Minister Patel should urge his cabinet colleagues to remove the 15% value-added tax from the chicken portions most consumed by low-income households. And he should encourage importers, wholesalers and retailers to pass on to consumers the benefits of low-priced and dumped imports,' Baird said.

The Association of Meat Importers and Exporters (AMIE) is chortling at the decision announced on Monday saying it was a major win for millions of cash-strapped South African consumers.

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“The liberalisation of trade policies can help consumers. The opposite is true of localisation and protectionist policies because they restrict competition, which lead to an increase in the price of local goods. We welcome that the Government has recognised that the timing and extent of these policies need careful consideration, and has suspended the implementation of tariffs for 12 months. It shows that the Government is putting its citizens first, which is exactly how it should be,” said AMIE CEO Paul Matthew.

According to Fairplay, the deluge of cheap imports of poultry products has escalated in recent times and had only been kept in check by the preliminary tariffs which expired last month.

Baird said there had been growth from Australia as well which had previously not been part of the equation.

He said there had been a 37 percent increase in whole bird dumping over the past year, with 44 percent of that being whole birds, 61 percent increase in bone-in-chicken, 54 percent increase in offal and an over 53 percent increase in mechanically deboned cuts.

"The Minister’s announcement merely provides the importers a reprieve for 12 months, and any “cheap” chicken imports simply goes into the pocket of the importer as healthy margins. No evidence exists that dumped chicken is sold by the importers at a low price to the consumer, and once again the importers will capitalise on the opportunity by actively participating in unfair trade practices. Already, total poultry imports exceed the volumes produced by South Africa’s largest local producer," Breitenbach said.

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