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SA chicken producers have been given some reprieve from dumped frozen bone-in portions of chicken from Brazil, Denmark, Spain, Poland and Ireland.
However, any price increase “beyond justifiable rises in production cost or fair margins” may again see the suspension of the anti-dumping duties.
South Africa’s trade watchdog, the International Trade Administration Commission (Itac), in July last year recommended the introduction of additional duties, besides the current most favoured nation (MFN) rate of 62 percent.
Trade, Industry and Competition Minister Ebrahim Patel accepted the recommendation in August last year but suspended the implementation of the duties for 12 months. The suspension period ended at the beginning of this month. They have now become effective.
The duties range from less than 3 percent for some of the companies in Poland and Ireland to 265 percent for one company in Brazil.
They will stay in place for five years from 1 August 2022.
Under scrutiny
Patel says the anti-dumping duties are protecting local producers from dumping, which destroys local jobs.
“However, local producers should not exploit the anti-dumping duties to the detriment of hard-pressed South African consumers. Poultry is an important source of protein, particularly for low and middle-income households.”
Itac says in a statement the Competition Commission and the Consumer Commission will be asked to “carefully” monitor poultry prices to determine whether unjustified price increases are introduced by local producers on the back of the anti-dumping duties.
If there are, the minister will ask for the suspension of the duties for another period.
Francois Baird, founder of the FairPlay Movement, welcomed the minister’s decision to implement the duties. “Patel’s decision last August went against the advice of South Africa’s trade regulator, Itac, which had investigated accusations of dumping by Brazil and the four EU countries.”
Delay extended damage
Despite agreeing that the dumping was harming the local industry, Patel decided to suspend the implementation of the duties for a year, claiming high food inflation and the potential for higher prices if imports did not support the industry.
Baird says this 12-month delay extended the damage being done to local chicken farmers and local jobs.
“It also did nothing to increase producers’ faith in Patel or the [poultry] master plan.”
Francois Dubbelman, trade law expert and founder of FC Dubbelman & Associates, describes Patel’s decision to task the Competition Commission with monitoring prices as “ridiculous”.
“What Patel fails to understand is that if the domestic industry’s selling prices are suppressed or depressed as a result of the low-priced imports and are now not allowed to become profitable again by increasing prices, clearly the trade remedy mechanism is not working as it should.”
He adds with the volatile rand, load shedding, inflation and crumbling infrastructure it would be especially difficult to address price increases and the reasons behind them.
The minister conveniently ignores the fact that the importers and retailers are the ones who are more likely to increase prices to retain their “huge profit margins”.
Inconsistency in action
Dubbelman says any investor – especially foreign direct investors – must by now have seen the red flags. Government is not prepared to address unfair trade, but when it does, “it is in an inconsistent manner”, with government prescribing how the industry must run its business.
Paul Matthew, CEO of the Association of Meat Importers and Exporters (Amie), declined to comment, saying the association will have to restrategise following the minister’s decision to implement the duties. – Moneyweb
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