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Troubled poultry producers are building an anti-dumping case against Brazil in a bid to lower chicken imports from South America, which account for as much as 75% of imported chicken meat in South Africa. However, the class action could take at least a year before materialising into something.
“We’re not trying to stop imports into the country. All we want is fair trade,” says Kevin Lovell, CEO of the Southern African Poultry Association (Sapa), an industry body representing local broiler producers. “If we could halve imports we could create around 10 000 jobs – which could be feeding 50 000 salaried people as opposed to people receiving social grants.
Over the past couple of years, listed South African poultry producers have been complaining about a dramatic surge in “opportunistic imports” – spearheaded by entrepreneurs who take advantage of a strong rand to import “excess chicken portions” (mainly from Brazil and Argentina) at prices far below fair market value. Imports in April were 50% up on April 2010. If that trend is annualised, this year will show the highest import volumes yet experienced.
SA slaughters 18,5m birds/week. Imported poultry at the April import level is equivalent to 5m birds/week, making importers the biggest poultry “producer” in the country if taken as an entity.
Presenting his company’s interim results, outspoken Astral Foods [JSE:ARL] CEO Chris Schutte said “imports are causing havoc” in SA’s struggling broiler industry. He referred to the issue as “classical dumping” because only portions of Brazilian chicken are “dumped” in SA. Accordingly, Brazilian poultry producers make a premium by selling a chicken’s breast-quarter in their local market and elsewhere and then export the leg-quarter to countries such as SA at below fair market prices.
Schutte said producing poultry in Brazil is cheaper due to lower input costs (yellow maize and soybean) and government subsidies, which SA’s producers don’t receive. Feed is the major input cost for producers, making up between 60% and 65% of total poultry production costs in SA.
Lovell says within the next two months Sapa will have presented its case to the International Trade Administration Commission (Itac), which will decide whether to institute an investigation into the matter or not. The investigation could take about a year to conclude, but Lovell is confident Sapa has a case.
The pending class action won’t be Sapa’s first. It previously succeeded in an anti-dumping case of chicken leg-quarters against the United States.
“We’re not trying to stop imports into the country. All we want is fair trade,” says Kevin Lovell, CEO of the Southern African Poultry Association (Sapa), an industry body representing local broiler producers. “If we could halve imports we could create around 10 000 jobs – which could be feeding 50 000 salaried people as opposed to people receiving social grants.
Over the past couple of years, listed South African poultry producers have been complaining about a dramatic surge in “opportunistic imports” – spearheaded by entrepreneurs who take advantage of a strong rand to import “excess chicken portions” (mainly from Brazil and Argentina) at prices far below fair market value. Imports in April were 50% up on April 2010. If that trend is annualised, this year will show the highest import volumes yet experienced.
SA slaughters 18,5m birds/week. Imported poultry at the April import level is equivalent to 5m birds/week, making importers the biggest poultry “producer” in the country if taken as an entity.
Presenting his company’s interim results, outspoken Astral Foods [JSE:ARL] CEO Chris Schutte said “imports are causing havoc” in SA’s struggling broiler industry. He referred to the issue as “classical dumping” because only portions of Brazilian chicken are “dumped” in SA. Accordingly, Brazilian poultry producers make a premium by selling a chicken’s breast-quarter in their local market and elsewhere and then export the leg-quarter to countries such as SA at below fair market prices.
Schutte said producing poultry in Brazil is cheaper due to lower input costs (yellow maize and soybean) and government subsidies, which SA’s producers don’t receive. Feed is the major input cost for producers, making up between 60% and 65% of total poultry production costs in SA.
Lovell says within the next two months Sapa will have presented its case to the International Trade Administration Commission (Itac), which will decide whether to institute an investigation into the matter or not. The investigation could take about a year to conclude, but Lovell is confident Sapa has a case.
The pending class action won’t be Sapa’s first. It previously succeeded in an anti-dumping case of chicken leg-quarters against the United States.
