By Francois Baird
Business Report readers deserve a clearer picture of import tariffs and the South African poultry market than was given to them by Paul Matthew in his article on July 28.
Matthew, the CEO of the Association of Meat Importers and Exporters, represents chicken importers who are defending a very profitable business. They are desperately trying to stop anti-dumping duties being imposed in August on chicken dumpers from Brazil and four EU countries.
They have launched an aggressive campaign to try to persuade the public that the government would be wrong to bring those anti-dumping duties into force on those companies guilty of dumping. Unfortunately, in the process they obfuscate, distort the facts and withhold important information.
The articles in Business Report by Matthew and his importer colleague, Fred Hume, are good examples.
Matthew’s one-sided arguments led a headline writer to say: “Import tax on chicken threatens the health of most South Africans.” That is factually incorrect, on taxes, on imports and on food security, but it is what chicken importers want us to believe.
Hume is more reasonable, but he pretends that duties of 265% could be imposed on all Brazilian imports, and 158% on chicken from Ireland. The reality will be very different.
Here is what chicken importers do not tell you:
– Anti-dumping duties are not an “import tax”, nor are they “punitive tariffs” as Matthew and Hume like to pretend. They are also not general tariffs, which would apply to countries or a group of countries.
– Anti-dumping duties are an important remedy in the defence of fair trade and fair competition. Dumping – importing goods at unfairly low prices to grab market share – is predatory trade. It harms local industries and costs local jobs. It contravenes world trade rules, and the World Trade Organisation prescribes anti-dumping duties to counter this harmful and pernicious trade practice.
– Anti-dumping duties are very specific penalties imposed on imports from specified producers in specified countries in order to counter the unfair advantage they would gain from their dumped imports because they are breaking the rules.
– The investigation into dumping by Brazil and the four EU countries was conducted by South Africa’s trade regulator, the International Trade Administration Commission (Itac). The investigation found that dumping was taking place, and harming South African chicken farmers.
– Itac recommended anti-dumping duties, producer by producer and country by country, depending on the level of dumping, to prevent further harm being done to South African producers and South African jobs.
Lower duties will apply to the big producers who have put their case to Itac. Duties on Brazilian products could be as low as 3.31%. Irish duties start at 2.49%, with a maximum of 37.52%, not the 158% that Hume claims.
This is the “evidence-based decision making” that Matthew pretends is not happening. It shows that food security is threatened not by anti-dumping duties, but by their absence.
The South African government agreed. In August last year, Ebrahim Patel, Minister of Trade, Industry and Competition, approved the anti-dumping duties but delayed their imposition for a year because he feared they might add to food price inflation.
That year is up, and chicken importers are doing everything they can to get another extension to fill their predatory pockets. They are arguing for action that supports jobs in Brazil and the EU, not in South Africa.
They don’t tell you any of this essential background. Instead they pretend that these duties, which the government has agreed are warranted, would result in huge disruptions to international trade, to the local chicken market and to “the health of most South Africans”.
And all because their profits are threatened. They import certain chicken portions at extremely low prices – sometimes a third of what South African farmers sell for – but those low prices do not benefit South African consumers. The local poultry industry says that when imported chicken reaches our shops, it sells for the same price as local chicken.
Matthew didn’t confess to any of this when he argued about “inflated prices”. Are chicken importers making fat profits at the expense of the “vulnerable households” they say they care about? They have some explaining to do.
He also says that the anti-dumping duties could push up retail chicken prices. The SA Poultry Association has presented Minister Patel with expert research and analysis showing that any impact would be minimal.
The study, by Genesis Analytics, one of South Africa’s most respected economics consultancies, is another contribution to the “evidence-based decision making” that Matthew supports.
Genesis found that the potential price impact could average a maximum of 2.5%, but that in reality it would be a lot lower. Competition between producers, and between retailers, would bring it down, and Brazil and other countries might drop their prices, as they have done previously, to counter any increase in duties.
Matthew said the local chicken industry needs to grow. In fact, it’s already happening – the industry has invested more than R2 billion, with more to come, in a significant expansion of chicken production that has led to nearly 5 000 new jobs.
This is part of the industry’s commitment in terms of the poultry master plan they signed with Minister Patel in 2019. Matthew also signed the master plan, but he doesn’t tell you that it commits signatories, including the government, to reducing chicken imports and to “act decisively” against illegal trade and dumped chicken imports. He pretends instead that the world will fall apart if what he signed up for actually happens.
The poultry industry now expects Minister Patel to make good on his commitment, acting decisively by implementing the anti-dumping duties he postponed last year.
The evidence that Matthew did not share with Business Report’s readers argues strongly in favour of this course of action. If duties are imposed, expect shock and horror from chicken importers, and predictions of local and international disaster. Just don’t believe them.
Most chicken in South African shops is free of import tax and anti-dumping duties. It is called South African chicken.
Francois Baird is founder of the FairPlay movement.
BUSINESS REPORT