There is no festive cheer in sight for the local poultry sector after Minister of Trade, Industry, and Competition Ebrahim Patel yesterday called for the suspension of anti-dumping duties on poultry for 12-months in a bid to cushion local South African consumers.
Yesterday Patel requested the International Trade Administration Commission (Itac) to review the tariffs on imported poultry so that a temporary tariff relief rebate could be enacted to counter the domestic supply crunch.
Patel directed Itac to consider the creation of a temporary rebate provision on meat and edible offal, fresh, chilled or frozen of fowls of the species Gallus Domesticus classifiable under HS0207.1.
South Africans are currently facing supermarket shelves with a shortage of eggs and chicken amid the worst case of highly pathogenic avian influenza (HPAI) in South African history that has led to millions of birds being culled and producers warning of further shortages in the coming weeks.
South Africa currently had anti-dumping duties on imports of frozen bone-in portions from Brazil, Denmark, Ireland, Poland and Spain.
The DA yesterday welcomed the news saying the political party had called for action on poultry import tariffs after the bird-flu outbreak to ensure that South Africans could afford to put food on the table.
Hume International is also advocating for the suspension of tariffs, saying last month that South Africans were facing the possibility of a chickenless festive season this year due to a perfect storm of supply shortages and rapid price hikes.
The CEO of the South African Poultry Association, Izaak Breitenbach, said on Thursday, “This industry has been in a loss situation since January this year and then had to content with the huge cost of load shedding on top of that. In June this year the HPAI outbreak started to escalate casing material harm to the industry and increasing production costs exponentially.
H said the industry was in huge distress and now Patel planned to give a rebate on the MFN duties and the anti dumping duties.
Most-favoured nation (MFN) tariffs are tariff rates a country applies to imports from all trading partners that are members of the World Trade Organisation (WTO).
“This implies that the minister over and above all the other challenges want the industry to compete with dumped chicken. Even the WTO disproves of the process of dumping.
“Giving a rebate on the MFN duty and anti dumping duties will simply be the straw that breaks the camels’ back for the industry,” Breitenbach said.
This month JSE-listed poultry players Astral, Quantum Foods and RCL Foods all highlighted the devastation avian flu will cause to their businesses.
Anthony Clark, an independent analyst at Small Talk Daily, who closely monitors agricultural data, yesterday said that Patel had thrown the Poultry Master plan under the bus.
“Just as the poultry sector thought they had some leverage to gain a much-needed price increase, Minister Patel throws a spanner in the works as he calls for greater imports to meet any potential short-term domestic supply shortfall,” Clark said.
He said while this was a noble cause to aid consumers that he could not dismiss, but if Minister Patel had really wanted to be fair, he may have considered softening the blow and offering the poultry sector an olive branch in terms of compensation for HPAI, as most global governments did to affected players.
“I absolutely empathise that heading into the festive period the potential for a shortage of the most widely eaten and affordable meat protein – chicken – will be in tight supply due to the most serious outbreak of HPAI that South Africa has ever encountered.
HPAI should have been the mechanism that the poultry sector used as leverage to the retailers – given the shortage of day-old chicks to rear – and the linear reduction in potential weekly production of between 4 – 5 million birds, given South Africa produces 22 million birds per week, he said.
Pricing discussions were currently underway for the important pre-festive period.
“However, a spanner has been well and truly thrown in the works with Minister Patel’s announcement that he seeks a temporary import tariff rebate. CEOs of poultry stocks must have shuddered in disbelief at the Government Gazette missive. Just as they thought they could claw their way out of a crisis by using some leverage to gain higher prices to offset soaring costs, government kebabs them!,” Clark said.
John Hudson, Nedbank, Head for Agriculture, said the primary factor driving the egg price is shortage of supply (due to 8.5m birds culled) and not the diesel price.
“Sadly the diesel price increase is going to only compound this and will impact everyone in the country from farmers right through to the consumer.” - Additional reporting by Given Majola
BUSINESS REPORT