Government contemplates rebate on chicken import duties

The government intends to introduce a temporary rebate on import duties of chicken meat to combat a potential shortfall in the face of a number of highly pathogenic avian influenza (HPAI) outbreaks.

According to the Department of Agriculture, Land Reform and Rural Development, the total loss due to the outbreaks amounted to around 1.4 million chickens by 21 September.

A total of 50 HPAI H7 outbreaks and 10 HPAI H5 outbreaks were reported.

Read: Chicken and egg prices set to soar ahead of festive season

Minister of Trade, Industry and Competition Ebrahim Patel has now directed trade commission Itac to consider the creation of a rebate on meat and edible offal of fresh, chilled or frozen chicken.

Food security

In a statement issued on Tuesday, Patel says the outbreaks led to the culling of around 2.7 million chickens.

“The impact of the depletion of locally available poultry will have severe food security implications on the availability and prices of poultry, which is a basic, staple protein in South Africa.”

He requested Itac to investigate a rebate on import duties “in an expedited manner”. Interested parties have been given two weeks (until 16 October) to submit comments to the commission.

Itac must consider whether the temporary rebate should only apply to ordinary customs duties or whether the recently reinstated anti-dumping duties should also be included.

Patel reimposed anti-dumping duties – after suspending the imposition for 12 months – in August. Imports of frozen bone-in chicken portions already carry a most favoured nation (MFN) rate of 62%.

Read: Local chicken industry finally gets protection from dumping

Imports from Brazil, Denmark, Spain, Poland and Ireland now carry additional duties for five years until 2027. They range from less than 3% for some companies in Poland and Ireland to 265% for one company in Brazil.

Paul Matthew, CEO of the Association of Meat Importers and Exporters South Africa (Amie), has welcomed the announcement.

“The minister is being proactive in the face of the huge bird flu outbreak in SA.”

Amie will be drafting its comments for Itac’s consideration. Matthew says it is still early days to discuss how the rebate could address the anticipated shortage.

Read:
Rainbow owner culls 410 000 chickens amid bird flu outbreak
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Local chicken industry finally gets protection from dumping

The South African Poultry Association (Sapa) has expressed dismay with the directive and the potential scrapping of import duties.

“It is our view that the current situation does not justify such a rebate,” says Izaak Breitenbach, general manager of Sapa.

He says the potential shortage is no more than around 30% if the culling is done, which has not happened yet.

The industry has in the meantime applied for the importation of around 22 million fertilised eggs to address the potential shortage.

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The agriculture department confirmed in a statement that it has facilitated the importation of fertile eggs for the broiler industry.

A similar request for table eggs will be considered if received. “We are also facilitating the transit to Eswatini of fertile eggs for their broiler production,” the department said.

Sufficient world supply

Breitenbach says introducing anti-dumping duties against the four countries has not stopped all imports into the South African market.

“We still have imports from Brazil, the US, Ireland, Spain, and now also from Argentina. There [are] sufficient chicken supplies available on the world market. We do not think a rebate is now justifiable.”

The local market has been hit by a “double whammy”, first the continued dumping of chicken and now bird flu outbreaks.

The bird flu outbreaks have a material impact on the profitability of companies and their ability to survive, says Breitenbach.

Financial impact

The damage suffered due to the outbreaks, with only three companies having published their financial results so far, amounts to more than R500 million.

“In all of this, we should not forget the small farmers, as they have been hit exceptionally hard by the flu,” says Breitenbach.

Sapa is convinced there will be sufficient supplies, which should address the minister’s concern about rising prices. The importation of 22 million fertilised eggs will also alleviate the anticipated shortage.

Listen to Jimmy Moyaha’s interview with executives from Quantum Foods and Rainbow Chicken about the impact of the avian flu outbreaks on SA’s poultry industry: