Chickens on a traditional free range poultry farm. There is concern that applications to increase import duties might make the meat unaffordable for ordinary people. Picture:supplied
South African poultry producers are pushing for stricter protectionist measures, but there are concerns over the long-term impact on consumers, and the focus should rather be to grow exports, said Hume International MD Fed Hume.
Local lobbyists have called for harsher anti-dumping duties to protect domestic poultry producers. Some have further argued that the Department of Trade, Industry and Competition (DTIC) should not renew poultry import quotas from the US under AGOA, (African Growth and Opportunity Act) claiming these quotas disadvantage domestic producers by increasing competition and lowering market prices.
The local poultry industry also late last year applied for chicken products to be VAT-free, arguing that it will improve citizens’ access to meat.
Hume, who is the MD of a company that has been an importer of frozen foods for over 25 years, said this stance was short-sighted and could potentially harm broader economic interests.
“Chicken is one of South Africa’s most popular and affordable meats. Yet the fact is that the local poultry industry has already been afforded substantial protection for years, with major impacts on consumer prices, and without commensurate reinvestments in expanding capacity or improving processes and standards to the level needed to grow exports,” he said in a statement on Friday.
He said it was generally no longer feasible to import products such as bone-in chicken, which is the primary focus of the local industry.
South Africa almost exclusively imports niche products such as poultry offal and mechanically-deboned meat (MDM), neither of which is produced in sufficient quantities by the local industry – and certainly not at competitive prices, said Hume.
“Protectionism hinders, not helps, development and competitiveness by reducing incentives for growth and failing to address the root causes of inefficiencies within domestic value chains,” said Hume.
He said South African imports of bone-in chicken, including leg quarters, drumsticks, and thighs, had dropped substantially over the past five years, decreasing by 84% to just 35 million kilograms in the year to the end of October 2024 from 216 million kilograms in 2019.
Similarly, imports of bone-in chicken portions from the US had plunged to only 10 million kilograms in the first 10 months from 73 million kilograms in 2019 – an 85% decrease.
“Ultimately, policies should prioritise affordability for consumers while encouraging and supporting a competitive local poultry industry,” he said.
South Africa’s main poultry export commodity is bone-in chicken, and on average, from 2016 to 2018, around 62 200 tons of chicken were exported annually. South Africa’s local producers produced about 1.8 million tons of chicken in 2023.
“Pursuing a protectionist agenda for poultry could jeopardise important trade relations, with severe consequences for numerous other sectors. For example, South Africa's strengthening trade relationship with the US, underpinned by programmes such as AGOA, has seen exports to the US reach nearly $14 billion in 2023 – double the value imported in return.”
Dranca Neo Phalatse, Postgraduate Coordinator at the Faculty of Natural and Agricultural Sciences at the University of Pretoria, said harsher dumping duties could help protect local chicken farmers from unfair competition.
“If imported chicken is being sold at ridiculously low prices, it’s hard for local producers to compete. But we also need to think about consumers—if duties make chicken too expensive, it might hurt people who are already struggling financially.”
Phalatse added that she understands where Hume International is coming from.
“If we impose harsher duties, it could lead to higher prices and less choice for consumers. Also, if local producers can’t keep up with demand, we might end up with shortages. So, it’s a tricky situation. We need to strike a balance between supporting local producers and keeping the market stable,” said Phalatse.
Professor Bonke Dumisa, an independent economic analyst, said he fully supports the imposition of heavy anti-dumping duties on all these imports which have negatively impacted the South African poultry industry.
“I don't believe in protectionism; we must not protect inefficient local/domestic poultry industries. To me, the imposition of heavy anti-dumping duties is not to protect inefficient local producers; it is simply to stop overseas exporters from selling chicken at prices lower than their cost of production at their source of origin.”
Business Report
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