Anti-dumping Duties to take effect on South African Poultry raises Concern over increasing Chicken Meat Prices

In Feb-21, the South African Poultry Association (SAPA) accused Brazil and four European Union nations of dumping poultry products, such as leg quarters and frozen in-bone chicken, into the Southern African Customs Union (SACU) at a price lower than South Africa’s market value.

SAPA argued that dumping the surplus chicken into South Africa has caused unfair competition, causing material injury to the poultry industry. SAPA further emphasized that the nation’s actions were clearly unfair trade practices against the World Trade Organization (WTO) rule and asked the South African government to safeguard the domestic poultry industry and prevent the loss of jobs.

The International Trade Administration Commission (ITAC) of South Africa found that the allegations made by SAPA were true and recommended that anti-dumping measures be imposed. The recommended tariff would include 265% on Brazil imports on top of the current 62% tariff, 154% on Ireland imports, 96.9% on Poland imports, 85.8% on Spain imports, and 67.4% on Denmark imports. The duties were approved by Patel and were imposed in the period between Dec-21 to June-22.

However, in Aug-22, Patel implemented a 12-month suspension due to concerns about rising food inflation, especially on chicken. Chicken is crucial in South Africa’s food security, accounting for 66% of total meat consumption in 2021. It is especially crucial to low- to middle-income households as a 2023 report by South Africa’s Competition Commission explained that South Africa’s poorest 10% spend up to 7% of their total income on chicken. As well-intentioned as Patel’s decision was, the suspension brought discontent from SAPA, stating that the suspension was going against the poultry sector Master Plan signed by the government in 2019 to expand and support the industry.

Since the suspension of anti-dumping duties, chicken imports have skyrocketed. According to South Africa Revenue Service (SARS), South Africa's Imports of chicken meat in Q4-22 have increased from 73, 590 metric tons (mt) to 122 455 mt in Q1-23, an increase of 66%. Brazil’s frozen chicken and boneless chicken were the main poultry products driving the import volume. Even when a general duty of 62% was imposed on Brazil, their prices were still lower than the prices sold by South African producers. Brazil imported chicken is selling for around R 9.00/kg compared to the high price of R30.50/kg from local producers. The high chicken prices were due to several challenges faced by chicken farmers ranging from increasing production costs, rolling blackouts, and avian influenza outbreaks. 

Source: South Africa Revenue Service

Consumers worry that the tariff will create a shortage, driving up prices which will be passed on to consumers at a time when chicken prices are already too high. There are also additional worries that poultry farmers will take advantage of the tariffs and hike up prices. ITAC acknowledges that prices for certain poultry products will likely see an increase. However, ITAC has also assured the public that there will be price monitoring to prevent price gouging. The Minister of Trade, Industry and Competition also warned local farmers, stating that the suspension of anti-dumping duties will be re-imposed if such actions are observed.

The poultry industry is facing challenging hurdles that have contributed to the high chicken prices. The reintroduction of anti-dumping tariffs is making consumers wary of further inflation and questioning if protection measures benefit the people. However, in a statement, SAPA argues that the tariffs are necessary to ensure the growth of South Africa’s second-largest agricultural sub-sector to decrease dependency on imports and increase self-sufficiency.