Business Report
By Banele Ginindza
Higher input prices signal tough times ahead for the local poultry market, despite the International Trade Administration of South Africa (Itac) last week imposing tariffs on poultry imports from Germany, the UK and the Netherlands.
The rise in the maize price could negate any benefits for the poultry industry from the anti-dumping tariffs, which range between 3.86 percent and 73.33 percent.
Itac on Friday announced the gazetting of tariffs that would be charged by the SA Revenue Service (Sars) on frozen bone-in chicken portions originating or imported from a number of companies from Germany, the UK and the Netherlands.
The investigation was started in October 2013 following an application by the South African Poultry Association (Sapa) to Itac for action against the alleged dumping of imports.
“After due verification of the information submitted by the applicant, the commission considered that there was prima facie evidence that the alleged dumping of frozen bone-in chickens originating or imported from Germany, the Netherlands and the UK was causing material injury to the Southern Africa Customs Union (Sacu) industries,” Itac said. Member countries include Botswana, Lesotho, Namibia, South Africa and Swaziland.
Dumping
Reacting to the tariff’s announced by Itac on Friday, Sapa chief executive Kevin Lovell said he was not convinced that the level of the duties was the most appropriate, as Sapa had made its application on the basis of publicly available information while Itac had made their final determination on the basis of confidential information at their disposal.
“The principle we are happy about is that they agreed with us that there is a problem. The important thing is that they have shared our views that the Europeans were dumping. We are grateful to them that they have done the work they have done,” he said.
“We would just hope, of course, that all the foreign importers would import to us at the appropriate price and not the dumped price, and then all of these disagreements between countries would come to an end,” he added.
In February, the local white maize price rose by more than 50 percent because of a drought in the local maize belt.
The price of the basic commodity rose from R1 965 a ton at the end of January, before touching a high of R3 018 a ton on February 17. On Friday it closed at R2 740 a ton.
Lovell said: “There was a brief period when things were going better for us, but with the recent drought and the large increase in maize prices and the potential for considerable further increases, we think that the environment could become difficult again in the next few months. But time will tell.”
David Wolpert, the chief executive of the Association of Meat Importers and Exporters of South Africa, said the imposed tariffs would probably not have an immediate affect on the local market because the three countries involved had been blocked from exporting their poultry since the last quarter of 2014 owing to an outbreak of avian influenza.
Wolpert said the margin of tariff increases was also negligible if taken in the context of the scale of production by companies in these countries.
“Of the three countries, only Germany would most likely be affected as its margins were increased by over 30 percent. They will be the worst affected by a long way,” he said.
US dispute
Meanwhile, the jury is still out on a dispute involving US chicken imports into the local market and an assurance for South Africa’s continued participation in the preferential trade scheme, the African Growth and Opportunity Act (Agoa).
Minister of Trade and Industry Rob Davies said in January that the process to tackle the issue had reached a stage where concrete offers were being made to resolve the matter. “This work has been ongoing,” Davies said on the sidelines of the World Economic Forum (WEF) in Davos, Switzerland.
He said that the process entailed “bringing our poultry associations together to work on a programme, which would provide some additional market access for US poultry products, but which would also have a developmental component – which involves investments by US companies, training, skills development and support for intra-Africa trade”.
In the past year there has been a push for South Africa to lower tariffs on some US chicken imports.
An anti-dumping duty is a fine that is imposed on imports believed to be priced below the cost of production. Such a duty is aimed at protecting the local industry from unfair competition.