JOHANNESBURG - South African meat importers warned on Thursday a hasty decision to implement tariff increases on chicken imported from non-EU and SADC countries could see shortages of poultry in local markets which domestic producers may not be able to meet.
An independent study commissioned by the Association of Meat Importers and Exporters (AMIE) into the South African chicken industry found that despite already high levels of trade protection, domestic producers have not increased production to meet growing demand.
AMIE said the research by global multi-disciplinary business advisory group, FTI Consulting, shows that significant tariff increases in an industry would result in chicken volumes available locally potentially dropping by more than 44,650 tons if current proposals are accepted.
Meat importers said the drop in volumes will result in higher prices and an estimated loss in GDP of R1.1 billion in the first year following an increase in tariffs, accompanied by rising unemployment, which will cause a further drop in domestic consumption and investment.
This goes against South Africa's large poultry producers under the South African Poultry Association which has applied for tariff increases against imports that range from 12 percent to 37 percent, to a flat 82 percent to be introduced to protect local industry from imports.
Paul Matthew, AMIE chief executive, said the solution is to adopt a freer market approach that allows imports to supplement supply where domestic production falls short.
Matthew said the research indicates that the shortage of chicken that will be caused by new punitive tariffs if they are introduced at the proposed levels, will have a negative impact on the South African economy.
"The only winners will be a handful of major producers who are already benefiting from lower feed prices and production costs in a highly efficient industry.
"The constant claim that chicken is being 'dumped' in South Africa is also misleading as it creates an impression of inferior goods being sold locally. Imported chicken is subject to many quality and veterinary examinations that ensure quality.
"The local broiler industry has been the subject of significant levels of protection over the years. These may have lessened the incentive to find solutions to problems it faces. The FTI Consulting study points to the maturity and efficiency of the local industry."
Matthew said these costs to the South African economy cannot be justified based on protecting the domestic poultry industry.
"Rather, punitive protectionism will lead to about 15 percent of local importers closing their doors. Job losses will be real. Other importers will find alternate suppliers, but the ultimate losers will be consumers who will pay more and have less purchasing options available," Matthew said.
African News Agency (ANA)