Proposed new chicken import tariff could cause shortages

The association had commissioned global multi-disciplinary business advisory group FTI Consulting to conduct a study into the South African chicken industry.

The study found that despite already high levels of trade protection, local production levels have stayed fairly stagnant despite increasing demand.

Import tariffs could cause chicken shortage
This means, if the new tariffs are imposed, South African could see a drop in chicken volumes of more than 44 000 tons which would likely cause shortages of the chicken meat around the country.

If a drop in volume was experienced, this would result in higher prices for chicken countrywide, which will obviously impact consumers directly.

“The only winners will be a handful of major producers who are already benefiting from lower feed prices and production costs in a highly efficient industry,” said AMIE chief executive Paul Matthew.

“Punitive protectionism will lead to about 15% of local importers closing their doors. Job losses will be real. Other importers will find alternate suppliers, but the ultimate losers will be consumers who will pay more and have less purchasing options available,” Matthew said.
Impact on the South African GDP
The report states that, if enacted, the tariffs will result in a R1.1 billion loss to gross domestic product within the first year, which will be followed by a downward spiral of reducing consumption and investment.

Matthew believes a more free market approach of allowing imports to supplement the domestic supply, which is pretty much how things stand as they are right now.

It also begs the question to be asked: If the tariffs aren’t being imposed to protect and help local producers, then why exactly are they even being considered in the first place?

Well, it’s important to remember this is the opinion of the Association of Meat Importers and Exporters, so they have a vested interest in keeping imports cheap.

However, the move could indeed be to protect the local poultry industry. In March of 2019, RCL Foods’ first-half earning report showed a dip in headline earnings of more than 25%.

Chicken dumping
This was believed to be due to a large increase in imports of chicken from Brazil in a process called ‘chicken dumping’.

This is the practice of taking huge quantities of chicken, possibly that which went unsold, and ‘dumping’ it on the South African market for way below the cost of production.

However, Matthew claims the stories of chicken dumping in the South African market have been overstated.




Farming Diary


05.12.2020 - 05.15.2020


06.17.2020 - 06.19.2020


06.17.2020 - 06.19.2020

Marketing Video