Poultry industry divided: Import tariff rebate throws a cat in the henhouse

Frozen chicken could become a pricey casualty as the battlelines are drawn in the war over anti-dumping tariff rebates, setting feathers flying.

This comes after the International Trade Administration Commission (ITAC)’s seemingly controversial recommendation to implement rebates for frozen poultry imports to curb shortages in the local market.

Itac’s stance was a response to Department of Trade and Industry (DTIC)’s call for intervention amid last year’s Avian flu outbreak.

In attempts to avert shrinking supplies, the DTIC instructed Itac to consider remedial trade action strategies.

Itac heed the call by making production contingency plans which included the import of broiler hatching eggs, as well as the proposal of an anti-dumping tariff rebate.

The efforts proved successful, and South Africans were able to put chicken on their dinner tables over the festive season – with no supply issues.

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‘Unnecessary, unjustified and damaging’

Following the steady supply, the South African Poultry Association (Sapa) said there was no rational argument to justify a rebate on tariffs – and called the implementation unnecessary, unjustified and damaging to the poultry industry.

“The industry is recovering from the worst avian influenza outbreaks in the country’s history, but neither poultry farmers nor industry analysts are expecting any shortages now that the threat has abated.”

Sapa believes implementing tariff rebates would work against the trade measures implemented under the Poultry Sector Master Plan – and against which the local industry made massive investments in production capacity.

“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.”

“They will only serve to place further investment at risk, place jobs at risk and threaten South Africa’s food security.”

The association was also concerned over the rebates being used by importers to exploit local producers, and enriching themselves at the expense of South African consumers.

“It’s quite ironic – Itac is the institution that calculated the material harm done to the local industry because of dumped poultry product, yet it has approved 65 permits, some of which will enable importers to purchase dumped product,” said Izaak Breitenbach GM of Sapa’s Broiler Organisation.

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Not all that bad

Meanwhile, Hume International, one of SA’s largest importers of frozen foods said the rebates provided much-needed relief amid anti-dumping duties.

“These rebates are meant to help the importers that supplement supply in the local market to meet demand and serve to partially offset the incredibly high and unnecessary duties importers continue to face,” said Fred Hume, managing Director of Hume International.

Hume questioned the “real reason” for the anti-tariff stance by key players of the poultry industry, saying that dumping was not a significant factor in SA to warrant high dumping duties.

He said that the interests of local producers were not jeopardised by the rebates, adding that local producers and importers were rarely in direct competition.

“The fact of the matter is, we’re not competing on price. We’re predominantly importing cuts that the local market does not supply in abundance, such as wings and drumettes.

“Most of what local suppliers produce in these segments goes to, for example, quick-service restaurants, leaving the rest of the market dry.

“Imports simply serve to bridge the gap in these shortfalls, and without the rebates, this chicken risks becoming unaffordable for many businesses.”

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Happy feet

Currently, South Africa charges a 30% on boneless chicken and 25% on bone-in-cuts, including chicken feet – an affordable protein source for many South African households.

Hume questioned the percentage, explaining that importers typically imported larger chicken feet, in excess of 35g per piece, which he said were highly valued by consumers.

“This is due to the common local industry practice of harvesting chickens at a younger age, yielding smaller feet, which provide less nutritional value and feed fewer people,” Hume said.

Hume believes the tariff rebates are necessary.

“It’s inconceivable that a country such as ours, faced with one of the highest unemployment and poverty rates in the world, can levy such a duty on this product at all.

“This is not a tax on a premium product typically consumed by the rich. It’s a more affordable foodstuff that serves as an important source of protein for countless households.”

“In the end, these rebates pose no real risk to local producers, but they do help importers plug any market gaps, while providing businesses and consumers with access to a wider range of products,” Hume concluded.

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