He explained that countries like the Philippines, with less stringent import regulations, can source MDM at much lower prices than South Africa.<\/p>\n\n\n\n
\u201cIn essence, they are currently importing MDM at around $500 a ton, and South Africa is paying around $1000 \u2013 so effectively double.\u201d<\/p>\n\n\n\n
Not only could this product be imported at a fraction of the cost, but it also does not make sense for South Africa to produce this product itself, Brink added.<\/p>\n\n\n\n
\u201cOur producers have conducted studies to determine whether it would be worthwhile producing it, but found that they made better profits selling off the carcasses \u2013 what remains after all cuts have been stripped off the bone \u2013 so they decided against producing MDM.\u201d<\/p>\n\n\n\n
In addition, MDM accounts for nearly half of all poultry imports.<\/p>\n\n\n\n
\u201cThe imports have certainly kept prices in check and without those imports, whether dumped or not, it is likely that chicken prices would have been at least 15% to 20% higher than at present.\u201d<\/p>\n\n\n\n
A study by Dr Lawrence Edwards found tariffs and anti-dumping measures raised chicken retail prices by 16.2%, while frozen chips saw an 18% increase due to similar duties.<\/p>\n\n\n\n According to Brink, the poultry industry’s real issue isn’t dumping, but it’s their flawed business model. <\/p>\n\n\n\n \u201cThe main problem, from a producer’s perspective, is that the industry has a completely wrong business plan, whereby they try to sell their product at the lowest possible price.\u201d<\/p>\n\n\n\n \u201cOf course, this is really good for the consumer, especially poor households, but it makes for bad business.\u201d<\/p>\n\n\n\n \u201cMore than 70% of total poultry produced in South Africa is sold as individually quick frozen (IQF) mixed portions, typically in 2kg and 5kg bags.”<\/p>\n\n\n\n If dumping were the real cause of producers’ struggles, then this would be the area where domestic and international producers compete the most aggressively. However, this is not the case.<\/p>\n\n\n\n “This product (mixed IQF) is not imported at all, which raises a serious question as to whether the imported products actually compete with the domestic product.\u201d<\/p>\n\n\n\n There are also different customs tariff classifications for different poultry products, namely:<\/p>\n\n\n\n “The average import prices differ vastly between the different classifications,” Brink said, which means that these products do not directly compete with each other.<\/p>\n\n\n\n \u201cA better business plan would be to try and sell each product for as much as you can.\u201d<\/p>\n\n\n\n \u201cFirst, fresh products attract higher prices, yet frozen products – which sell at a lower price – attract higher costs.\u201d<\/p>\n\n\n\n \u201cTypically, individual portions also sell at significantly higher prices than mixed portions, so it would make more sense to sell a higher proportion of your total products as drumsticks, thighs, breasts and so on, rather than as mixed IQF.\u201d<\/p>\n\n\n\n The amount of brine used in South Africa’s chicken products is also cause for concern. <\/p>\n\n\n\n \u201cOur products still include 15% brine, whereas most imported products contain anything from 0% to 4% brine, which means that you get a better flavour, healthier product (less sodium) and less shrinkage when cooking.\u201d<\/p>\n\n\n\n Brink also criticised the lack of investment in gaining EU export clearance, which could open lucrative markets. <\/p>\n\n\n\n \u201cSouth African producers have also refused to invest in the necessary processes to obtain clearance to export their products to the EU.\u201d<\/p>\n\n\n\n \u201cThe EU prefers white (breast) meat, and if we can access that market, we would export thousands of tonnes to the EU at much higher prices that we can attain at home.\u201d<\/p>\n\n\n\n \u201cSo, if I were to set up a poultry processing plant today, I would ensure that I produced to EU standard, export all of my breasts, and sell the rest of my products as specific portions, rather than mixed portions \u2013or even move up the value chain into ready-made chicken dishes.\u201d<\/p>\n\n\n\n While imports naturally affect pricing in every industry, South African poultry producers do have options which could help them boost their profitability and remain competitive on an international level.<\/p>\n\n\n\n \u201cBottom line, it’s easier for the industry to complain than to actually do something about their own situation,\u201d Brink said. <\/p>\n\n\n\n \u201cThis does not mean that imports do not have an impact – the anti-dumping duty-free quota on imports from the US has a massive impact, as the dark meat (drumsticks, thighs, leg quarters) are a by-product for them and sell at exceptionally low prices.\u201d<\/p>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/10\/Kuala-Lumpur-Malaysia-13-FEB-2024_-Interior-view-of-huge-glass-fridge-with-various-choice-frozen-foods-in-Mercato-grocery-store-1024x576.jpg\")
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