Push to make South Africa’s favourite protein cheaper

The South African Poultry Association (SAPA) says it is pushing to make more chicken products free of 15% VAT so that the country’s most consumed protein can be more affordable to the masses.

This is part of the industry’s response to higher prices in South Africa, while the sector also looks to new export avenues to help soften the blow of a highly competitive market and pressure from dumping and importers.

SAPA has hit back at critics of the industry’s push for anti-dumping duties on chicken, saying that local producers are competing against importers beyond surface-level views of the sector.

The association was responding to recent insights from mercantile law and dumping expert Dr Gustav Brink, who expressed a view that anti-dumping duties and government interference have been pushing up poultry prices in the country—rather than dumping itself.

The view, shared by others in the animal husbandry industry, pointed to other countries being able to import poultry at much lower rates than South Africa, largely because of the duties we attach to such imports.

The critics argued that the single biggest imported poultry product is mechanically deboned meat (MDM), which is not produced locally and thus does not compete with local producers, who mainly produce individually quick frozen (IQF) packs.

Brink cited a study which found that tariffs and anti-dumping measures raised chicken retail prices by 16.2%.

However, SAPA has refuted the assertions, stating that even though MDM makes up the biggest portion of imports—about 60%—the other 40% or so are still products which the local market can satisfy and are subject to intense competition from importers.

In addition, it said that while mixed IQF packs are not imported, “they are assembled locally by importers who thaw bulk frozen imports, inject brine into chicken pieces, and refreeze them in mixed packs to compete with local IQF”.

“In addition to this imported competition for local IQF packs, there is also competition from imported whole chickens, half chickens, breast meat, heads, livers, gizzards and 10kg packs of catering portions. To suggest that imports do not compete with local chicken is nonsense,” it said.

SAPA said that the local industry is highly competitive, and local producers can produce chickens cheaper than EU countries, but not Brazil and the United States, which have lower feed costs because they produce all their own grain.

“We are happy to compete with fairly priced chicken imports. What no industry can compete against is dumped imports, such as the leg quarters and other bone-in portions dumped here as unwanted surplus by the EU, US and other countries in previous years.

“That is why we have secured anti-dumping duties against nine major poultry-producing countries.”

The association said that many of the challenges with dumping and imports lie below the surface-level view of the industry and that suggested alternatives by the critics are unlikely to yield results.

It pointed to suggestions of increasing exports to Europe at a premium, noting that South Africa is unlikely to meet the requirements for certification, despite having disease-free production plants. These prices would also be beyond the reach of the majority of South Africa’s population.

However, export initiatives are underway.

“Our poultry producers have spent millions in the past five years in new facilities to produce cooked and semi-cooked chicken meat. The requirements for cooked meat are less onerous,” it said.

“Exports are underway, and now we are looking for export approval from the EU, the United Kingdom and Saudi Arabia for cooked products.”

In addition, the association said it was aware and sensitive to the cost impact in South Africa, noting that the sector is applying for the removal of a 15% value-added tax (VAT) to make chicken even more affordable.

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