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By Amanda Visser

Moneyweb: Journalist

Several plans hatching to mitigate chicken shortage in SA

Potential rebate on existing import duties on meat and edible offal of fresh, chilled or frozen chicken still under investigation.

The first batch of 63 million fertilised eggs ordered to mitigate the expected shortage of chicken meat in South Africa has already landed in the country. The rest will enter our borders in different batches until February next year.

The Department of Agriculture, Land Reform and Rural Development has granted permits for the importation of fertilised eggs, poultry meat and table eggs to mitigate the expected shortage of poultry products due to the outbreak of bird flu in several provinces.

Around six million commercial layers and 2.5 million breeder parents were culled during May and June, sparking fears of a shortage over the festive season, which could translate into higher prices.

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Import duty rebate on chicken

Minister of Trade, Industry and Competition Ebrahim Patel has since directed trade commission Itac to investigate the creation of an import duty rebate on meat and edible offal of fresh, chilled or frozen chicken to bolster supplies. 

Itac must also consider whether the temporary rebate should only apply to ordinary customs duties or the recently reinstated anti-dumping duties should also be included.

Will rebate lower chicken prices? Stakeholder responses

The initial deadline for submissions from importers and local producers was 16 October.

To date, Itac has received 18 comments from stakeholders across the value chain, including government departments. Extensions were provided to specific stakeholders until 25 October, with further provision for counter comments until 30 October.

Itac will convene a special meeting to evaluate the information and send a final finding to the minister. Itac did not specify any timelines for the meeting or the finding in its media statement issued on Tuesday.

Izaak Breitenbach, general manager of the South African Poultry Association (Sapa), believes granting a temporary rebate when industry players and importers have already provided for additional supplies does not make sense.

He is also not convinced that a temporary rebate on import duties will result in lower chicken prices. Even without a duty rebate, consumers have not benefitted from dumped imports.

“So why would one grant a tariff rebate that will only land in the pocket of the importer and not in the pocket of the consumer?

“We have already slid into a loss-making position in January this year. Local industry players were hit with additional expenses due to load shedding and now the culling of six million commercial layers and 2.5 million breeder parents.”

ALSO READ: Chicken shortage to get worse from next month, could last for 12-18 months

No compensation for culling

Local producers are not compensated for the cost of culling their chickens. They are also losing income on future production from them.

“Now government wants us to compete against dumped chicken on top of that,” says Breitenbach. “That is clearly not in the interest of the industry in the long term.”

In its submission, the Association of Meat Importers and Exporters (Amie) acknowledges the challenges facing the local poultry industry. It recognises the importance of providing some level of protection to balance the playing field and ensure the continued success of the local industry.

However, the ordinary customs duties are extremely high. Amie asks for a reduction to 37% (from the current 62%) on bone-in chicken, 12% (from 42%) on boneless chicken and 0% to frozen offal.

Amie CEO Paul Matthew says 37% is an appropriate position that will allow local producers to remain competitive once they have recovered from the bird flu outbreaks.  

Amie believes the highly pathogenic avian influenza outbreaks will lead to significant chicken shortages if market access remains restricted. “Maintaining a stable supply is important for food security.”

Recurring bird flu outbreaks

The outbreaks have become a recurring issue, and each outbreak seems to be more severe, the association argues.

“If we consider the current AI [avian influenza] outbreak as causing a 16% reduction in domestic production (2023/24), shortages will escalate to 847 000 tons,” says Matthew.

Without a temporary rebate, options to supplement shortages will be severely limited, he adds. Amie is asking for a 12-month reduction in import duties.

Breitenbach says the figures quoted by Amie seem “opportunistic”. Even without the rebate, there is a big increase in imports on the way to SA due to the import perm

“Currently, there is no shortage of chicken meat on the shelves, and it is also not reflected in prices, which means that our projections are in line with what is happening in the market.”

When will imported chicken land in SA?

Breitenbach says if Patel now decides on a duty rebate, the imported chicken will only land in SA after December when demand flattens.

“The timing is not very efficient to address the peak of the expected shortage.”

The fertilised eggs have been ordered to ensure that the production chain is maintained for a continuous supply to the market.

Matthew requests that if a rebate is created, the relief be extended to shipments already on the water from the date of implementation.

“It is not clear when the investigation will be finalised, making it difficult for importers to plan their procurement accordingly,” he adds.

This article is republished from Moneyweb under a Creative Commons licence. Read the original article.

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