In the news this month:
The reinstatement of anti-dumping duties on imported chicken continues to place strain on the local food supply. The new duties include an anti-dumping duty of up to 265% on chicken imports from Brazil, Ireland, Poland, Spain, and Denmark.
Izaak Breitenbach, General Manager of the South African Poultry Association claims that the landed cost of imported chicken from Brazil is around R9.00 per kilogram, while local producer prices are closer to R30.50. However, this estimation does not take into account the cost of mechanically deboned meat (MDM) chicken and offal, which are often significantly less expensive than bone-in meat.
Importing chicken leg quarters, a popular cut in South Africa, is already costing over R35.00 per kilogram, including duties. Local producers have a clear advantage over international competitors. The government collects import duties of 82% and 62% from Brazil and the US, respectively.
All market participants, including producers, sellers, consumers, and the government, will benefit from reciprocal trade. South Africa cannot expect to export with low or no duties while imposing absurd duties on import partners. US poultry imports and low anti-dumping duties are a necessary trade-off for the local poultry industry to ensure South Africa's continued participation in the African Growth and Opportunity Act (AGOA) trade agreement, which provides beneficial trade terms for local manufacturers with America.
The agreement has created numerous jobs and contributed significantly to the disposable income and purchasing power of South African citizens, who consume both local and internationally sourced chicken.
New duties in South Africa may lead to supply shortages of popular chicken cuts, resulting in higher prices on the shelves and in restaurants. Hume International, as a local food distributor, prefers a consistent supply of affordable, locally produced chicken. However, the local industry currently lacks production and faces challenges in growth and profitability. Customers, including wholesalers and retailers, have been willing to pay a premium for imported chicken due to the shortage. Further engagements and discussions with stakeholders are needed to find better solutions. Until then, the new tariffs should be suspended.
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