The decision by International Trade Administration Commission (Itac) on Friday to allow rebates on frozen chicken imports is a blow for local poultry producers, who now face greater competition from imports after many of them faced massive financial losses last year.
Itac has recommended to the government that certain rebates on frozen poultry imports be regulated in the event of chicken supply shortages, caused by the outbreak of Highly Pathogenic Avian Influenza (HPAI) last year, although, there has been no shortages.
The South Africa Poultry Association (Sapa) said on Friday, “The implementation of a rebate and any permits issued under this will be the single most damaging action to a poultry industry already on its knees.”
Smalltalkdaily Research analyst Anthony Clark said he believed this decision was “blatant ANC electioneering”, as there was no shortage of chicken because demand over the festive season had been less than expected and local producers were able to meet this demand.
He said poultry producers had just begun to see some light financially following last year’s challenges, and after soft commodity prices had started to decline.
Apart from HPAI, poultry producers also had to deal with load shedding, many municipal infrastructure related challenges and high feed prices.
In October 2023, following the HPAI outbreak, Trade, Industry and Competition Minister Ebrahim Patel instructed Itac to consider remedial trade actions to ensure South Africans would have enough affordable poultry product for the coming festive season.
However, Sapa said on Friday, “There is no rational argument for a rebate on tariffs; the supply chain is well stocked.”
Chicken prices in December, according to the Pietermaritzburg Economic Justice & Dignity’s Household Affordability Index, have increased, year-on-year broadly in line or below the inflation rate.
Sapa said that after the outbreak of HPAI, measures were implemented to ensure there were no shortages.
Broiler hatching eggs were imported to fill gaps in supply, and together with the industry’s production contingency plans and available chicken stocks, any shortages were averted.
In contrast, the Association of Meat Importers and Exporters of Southern Africa (AMIE) welcomed the government’s decision. AMIE said the decision would aid financially struggling consumers to help keep a lid on chicken prices.
However, Sapa said AMIE’s “rhetoric and mistruths” only served a “narrow purpose.”
“Whilst crying out for the government to protect the consumer, we often see news of players in the import industry participating in illegal trade practices (such as) media reports around frozen chicken shipments into South Africa are being used to move illicit drugs such as cocaine,” Sapa said.
Sapa said the South African poultry industry was a R60 billion strategic national asset – the second largest agricultural sector in the country, and the largest employer.
“Implementing tariff rebates simply work against the trade measures implemented under the Poultry Sector Master Plan - and against which the local industry made massive investments in production capacity.”
Sapa said they hoped the rebates would not merely become another avenue for the importers to exploit, quietly enriching themselves at the expense of the South African industry and the consumer.
“We will be dismayed if the government even considers applications, never mind approves permits for poultry imports under the rebates. This would move to sacrifice one of the few agricultural industries in South Africa that is globally competitive,” Sapa said.
Last week the government had published protocols for vaccination and the industry would continue engaging positively with the relevant authorities towards the aim of vaccinating the national poultry broiler breeding flock.