| Business Day Paul Vecchiatto SIMMERING tensions over whether South Africa should increase tariffs on imported poultry products came to a head during Tuesday’s hearings before Parliament’s agriculture committee as importers and local producers faced off. Trade and Industry Minister Rob Davies is due to make a determination over whether the current tax of 27% on imported poultry products should be increased to 82%. Opposing the increase is the Association for Meat Importers and Exporters (Amie), which claims that a tariff hike would have a limiting effect on imports, with the result that local producers would be less competitive on a global scale. Rooting for a tariff hike is the South African Poultry Association, which argues that the local industry is efficient and that tariffs would not result in exploding local prices. Chicken and poultry products make up the largest market for animal protein eaten by consumers in South Africa, making up more than 65% of the average grocery basket. Chicken farming is also the largest part of the total agricultural sector, making up about 25% of agricultural gross domestic product. The chicken sector employs 50,000 people directly and another 60,000 indirectly. A further 18,000 people are employed in the grain industry to supply feed. According to the poultry association, poultry generates about R30bn in farm-gate revenue and about R1bn in corporate taxes. "If it collapsed, R30bn in foreign exchange would be lost to South Africa to imports," the association’s senior executive, Sol Motsepe, said. The association also said the local poultry industry was being devastated by imports, leading to companies such as Austral South Africa, Country Bird Holdings, Rainbow Chicken, and Afgri South Africa showing losses. However, Amie member Georg Southey dismissed most of the poultry association’s arguments, saying should the tariff increase be approved, it would have a limiting effect on total imports and those from non-European Union countries, such as Brazil, would in effect cease. Mr Southey said imports amounted to about 10% of total chicken production in South Africa. He said Amie believed that the International Trade Administration Commission of SA (Itac) had already approved the tariff increase and forwarded it to Mr Davies. Mr Southey also said the delay in the announcement has led to speculation "and is now causing real market disturbance". According to the Amie presentation, the depreciation of the rand has already provided a 25% protection for local producers. "If they can’t do more with that kind of protection, then will they be able to do more with an added tariff?" Mr Southey said. Competition commissioner Shan Ramburuth said investigations by the commission had found elements of collusion among the major chicken producers. He said this occurred through information sharing during meetings of industry associations where areas of the country were informally divided up among them. Mr Ramburuth said the poultry sector was vertically integrated with high entry barriers. This included cases investigated by the commission where producers of day-old chicks would refuse to sell them to a company unless the grain was also bought from them. Mr Ramburuth said import tariffs tended to stifle competition from imports that otherwise could force domestic producers to compete. |