Chicken import tariff increases will not solve industry problems – association

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Ebiesa stated that Sapa’s rationale for seeking the tariff increases was that imports were damaging the local industry, but Ebiesa disagrees, stating that Sapa is seeking to protect its members’ profits to the detriment of consumers and emerging black importers by retaining a “skewed monopolistic structure”.

Ebiesa said in a statement on Tuesday that it wanted the application to wait until the Department of Trade, Industry and Competition (DTIC) completed and implemented a master plan for the poultry industry.

The DTIC said it would announce its decision on the chicken tariffs by the end of August, based on a recommendation by the International Trade Administration Commission of South Africa.

“Raising tariffs before the industry plan is done, is putting the cart before the horse and shows that there is no genuine intention to remedy the industry’s current challenges,” noted Ebiesa chairperson Unati Speirs.

Speirs explained that the current industry challenges included a failure to transform, a refusal to invest and grow to meet local demand and failure to develop a poultry export programme.

“Increasing the existing tariffs on imports will not fix the real sources of the industry’s problems, which include operational inefficiency, a lack of innovation and a reluctance to transform.”

Mkabayi Group director and Ebiesa member Nontwenhle Mchunu said many of Ebiesa’s members were also local producers and had a vested interest in seeing the local industry grow for many years.

“This should not be about choosing between local production and imports, but finding a policy balance that supports both, as we need both to drive sustainable job creation and economic growth.”

Solidaridad South Africa MD and agribusiness consultant Mandla Nkomo echoed Ebiesa and Mchunu’s sentiment, saying that South Africa was not ready to eliminate imports through the imposition of a prohibitive 82% tariff.

“South African producers are only able to produce 70% of the chicken required to feed the country’s consumers and this gap in production has been there for years.  The remaining 30% is imported from other countries, except when the South African industry faces outbreaks of avian flu and drought, in which case South Africa has to import more chicken to meet local demand and ensure security of supply.

“Why destroy the jobs created by imports when local production has not been improved to substitute these imports?

“The truth is that, over the past 15 years, the local industry has failed to invest to meet local demand. The entire feed and genetics pool for chicken is controlled by the four big poultry producers to the detriment of small local producers,” noted Nkomo.

Speirs pointed out that chicken was South Africa’s cheapest source of protein and that an increase in tariffs would lead to price increases for already cash-strapped consumers facing high food prices.

“Tariffs were both the enemy of the consumer and South Africa’s trade relations, and so should be considered as a very particular remedy in a specific set of circumstances, not as a bandage for a local industry facing historical and structural problems,” she stated.