Trade and Industry Minister Rob Davies.  Picture: FINANCIAL MAIL
Trade and Industry Minister Rob Davies. Picture: FINANCIAL MAIL

Trade and Industry Minister Rob Davies says a "comprehensive strategy" is needed to deal with the intensified competition imported chicken poses to local poultry producers.

But his solution — raising general tariffs instead of imposing antidumping duties — has disappointed local producers.

Mr Davies last week decided against imposing antidumping duties on imported whole bird and boneless cuts from Brazil, as requested by South African Poultry Association, because he believed the problem extended beyond just one country.

He further did not want to fight with Brazil at the World Trade Organisation (WTO). Brazil has lodged a complaint against the preliminary antidumping duties that the International Trade Administration Commission (Itac) imposed in February.

Mr Davies said Brazil had regarded the duties as a "huge precedent" and it was determined to fight against them through the WTO’s dispute resolution mechanism. There was scope for the general tariff for poultry imports to be increased without having to resort to antidumping duties.

The Department of Trade and Industry had discovered that there was "considerable water" between the bound tariffs on chicken imports (the maximum which South Africa can impose) and the much lower tariffs which South Africa actually applied, Mr Davies said.

South African Poultry Association CEO Kevin Lovell said the body was "very disappointed" with Mr Davies’ decision. The association believed South Africa should have fought what was an issue of unfair trade at the WTO.

Itac had decided that Brazil was guilty of dumping after two investigations.

Mr Lovell said raising the general tariff would be an effective measure only if it could be applied to all countries.

But the European Union (EU), a significant exporter of chicken-leg quarters to SA, was excluded in terms of the Trade Development Co-operation Agreement it signed with South Africa.

The agreement stipulates that there would be zero tariffs on chicken imports.

Mr Lovell believed it was inappropriate for a fair trade measure (general tariffs) to be used against unfair dumping, which was causing "massive harm" to the local industry.

The South African Poultry Association estimated that R3.5bn worth of chicken entered the country at unrealistic prices over the past year — about 5-million chickens or their equivalent each week. If the chicken was produced locally, 20,000 jobs would be created.

Association of Meat Importers and Exporters CEO David Wolpert said the stance that his organisation adopted towards a general tariff hike would depend on its size. He warned that any increase in the tariffs would hurt consumers as it would result in higher prices.

Mr Davies conceded that there was growing foreign penetration of the local chicken market and something needed to be done. The provisional antidumping duties the department had imposed had not had the desired effect.

The duties had in fact benefited the import of chickens from countries such as Brazil and those in the EU. This had negatively affected local poultry producers.