It’s the proverbial chicken and egg story: Are South African chicken farmers unable to supply their market with a basic and affordable source of meat or are some European countries trying to pawn off their unwanted product on South Africa?
At the end of last year, South Africa’s International Trade Administration Commission (ITAC) started an investigation into the anti-dumping of frozen bone-in chicken by Holland, Germany and the UK, after a complaint was lodged by the South African Poultry Association (SAPA). CEO of SAPA, Kevin Lovell, claims that these countries are selling chicken parts unpopular in their markets for much less than the cost of production and for prices so cheap, local producers can’t compete. For example, says Lovell, they are selling leg quarters to South Africa for 25% of the price of breast meat.
But economist Johan Fourie says that the South African chicken industry is the genesis of the problem. He believes that protecting their bottom-line will come at the expense of poor local consumers for whom affordable food is a lifeline. This is what’s at the heart of SAPA again lobbying the South African government to enforce anti-dumping duties, to increase import tariffs, on international countries that supply chicken to South Africa.
What’s made South Africa (and other developing countries) such a fertile market is that chicken is the least expensive form of protein here. And that most South Africans eat all parts of the chicken—“Literally everything, except the blood and feathers,” says Lovell. “In the US and EU they prefer some parts of the chicken, skinless and boneless. So there is limited to no demand for bone-in chicken there, so that stuff has to be sold somewhere.” Lovell likens it to selling second-hand clothes: “Unwanted, it’s being sold at an artificial price.”
SAPA wants anti-dumping duties of 91% on Germany and the Netherlands and 58% on the UK. The effect would be to let the local industry better compete against the foreign chicken suppliers, but it’s also going to raise the price of chicken on an already strained base of consumers. Fourie believes that should SAPA succeed in its bid, the real loser will be the poor South African consumer, for whom chicken is a key and affordable source of protein. According to one report, “South Africans eat more than 1 billion chickens a year, which is eight times more than the quantity of beef consumed in the same period.”
Fourie raised the same objections in April last year when SAPA lodged a complaint to stop Brazil bringing in whole birds and boneless cuts. “What Brazil gave to us,” says Lovell “was a reasonable level of protection from all countries—other than the EU, which all of a sudden became competitive.” In 2000 it was the United States: “That stopped the export of US leg quarters immediately.”
Fourie says this is not sustainable. The main problem is that South African producers will never be able to compete, not unless they become more efficient. “They need to think broadly about transport costs, which are too high, as is labor and other production costs,” says Fourie. In a month or two, ITAC will come back with its findings. If they find in favor of SAPA, says Fourie, then the message is clear: “That once you lobby government hard enough you win—against value for consumers.”