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Johannesburg – Government has the necessary tools to protect the local poultry industry, which is currently experiencing massive losses due to low import tariffs, according to the Food and Allied Workers Union (Fawu).
In a telephonic interview with Fin24, general secretary Katishi Masemola said the solution to the current poultry crisis lies with government.
Given low import tariffs, local producers have to compete with lower priced imported poultry, which feeds into job losses. City Press previously reported that the loss-making poultry industry will be implementing a number of retrenchments.
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“Job losses by RCL Foods [Rainbow Chicken] is expected to be 1 250 by the end of the month. The third biggest producer, Country Bird, plans to cut 1 500 jobs in the next few months,” said Masemola. “In a country where 9 million people are unemployed, one job loss is one too many.”
If government does not take any steps to protect local industry, there will more job losses, he added.
Government recently received approval to implement a 13.9% safeguard duty on frozen chicken legs imported from the European Union (EU). This provisional import duty will apply until July 3 2017.
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However, Fawu believes this is far too low and that the figure should be close to 40%. Masemola added that government should implement stricter anti-dumping duties. “We are surprised that government has thrown its hands in the air and is doing nothing.”
The EU is the main bone of contention. Poultry is imported from Brazil and the United States, but the impact from this on the local industry has been minimal compared to the EU. It has a cross-subsidising policy where it sells white boneless meat at high prices in local markets, and then exports or dumps the boned chicken, or legs and thighs, at extremely low prices, explained Masemola.
Kevin Lovell, CEO of the South African Poultry Association (Sapa), told Fin24 that the association will be delivering its comment on the investigation of the provisional safeguard duty to the International Trade Administration Commission (Itac) this week.
Sapa believes Itac has recognised South Africa’s poultry industry is in crisis, and that the EU is the main cause. However, the solution proposed will not work, said Lovell.
Lovell said the association will comment on the methodology used to determine the 13.9% safeguard duty. It will also give an update on “the harm” to the industry. “The situation has become worse for the industry,” he said.
If a solution cannot be reached, it will result in “massive losses” for the industry throughout the year, added Lovell. Besides the import tariffs, it is important for government to deal with why South Africa has to pay more for maize and soybean (feed) than competitors.
The quality and safety of imported products must also be addressed - “local and imported products are meant to be treated the same, but imported products seem to get a free pass”.
Lovell also said that this is a multilateral government to government process, and that any solution taken should be compliant with the World Trade Organisation.
In December the Department of Trade and Industry (dti) issued a statement noting the concerns of the local poultry industry. The dti stated it was working with government and the Department of Agriculture, Forestry and Fisheries to address the challenges. Among the solutions include finding new export markets.
ALSO READ: SA slaps huge import tax on EU chicken legs
The outbreak of highly pathogenic avian influenza in parts of Europe will only be temporarily beneficial for local producers and will not offer a permanent solution, added Lovell.
“Out of the 10 EU countries that export to South Africa, seven are restricted because of the influenza.” If the influenza is brought under control, trade with the EU can resume by April. “We need a solution before then," he said.
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