Import duties for the US were imposed in 2000 on all frozen chicken quarters exported to SA by Tyson Foods Inc and Gold Kist Inc. The companies initially paid R2,24/kg and R2,45/kg respectively, but after the poultry companies refused to co-operate during the latest International Trade Administration Commission (ITAC) review, it was decided to impose a blanket duty on all imported chicken from the US as of 5 April.
“When companies refuse to co-operate with investigations into dumping, then a higher duty is generally imposed,” explained Kevin Lovell, CEO of SAPA. He said that since the higher duties were imposed, imports of chicken leg quarters from the US had reduced drastically and were no longer a threat to local producers. However, the duties have not curbed the tide of chicken dumping, which is said to have increased by 40% over the last year.
“The market, on the other hand, has not increased by 40%, which has put the local poultry industry in distress,” said Izaak Breitenbach, managing director of Afgri Poultry. “Chicken imports from Europe have increased materially in the last month so there is still more imported chicken on the market than locally produced chicken.” Breitenbach said that there is a “crisis in the industry” due to the oversupply of chicken on the market.
“We have lost on average R1,50/ kg on individually quick frozen chicken pieces due to an oversupply on the market.’’ The oversupply is due to a flood of imported chicken and a rollover of stock from January when consumer spending decreased drastically due to economic constraints. Duties aside, illegal chicken imports are hurting the local industry. Breitenbach estimates that 50% of chicken that is exported to SA is illegal in that producers are not paying the correct import taxes and duties, or the chicken is declared under the wrong tariff.
“Feed price has pushed the production cost of chicken up by R1,60/kg. But we can only recover R1 in the market. We just can’t compete with dumped and illegal imports that are sold cheaper than what we can produce for.” But Breitenbach said that a blanket duty was required for all countries exporting chicken into SA to ensure that dumping does not hurt the industry. “Companies have no other option but to cut costs when profits fall and this includes job losses.”