Australia appears to be using South Africa as a landfill for its chicken, with Australian producers somehow managing to land servings of chicken here at lower prices than other countries known to dump chicken into the country. According to the FairPlay movement, SARS data shows these extraordinarily low prices. In December, chicken thighs worth R626,000 at R8.89 / kg were imported, about half the price of the thighs that Brazil has been accused of dumping in South Africa. The FairPlay Movement is a not-for-profit trading movement fighting for jobs with the goal of ending predatory business practices …
Australia appears to be using South Africa as a landfill for its chicken, with Australian producers somehow managing to land servings of chicken here at lower prices than other countries known to dump chicken into the country.
According to the FairPlay movement, SARS data shows these extraordinarily low prices.
In December, chicken thighs worth R626,000 at R8.89 / kg were imported, about half the price of the thighs that Brazil has been accused of dumping in South Africa.
The FairPlay movement is a non-profit trading movement fighting for jobs with the goal of ending predatory trading practices between countries to allow nations large and small to play by the same rules. It supports the principle that penalties for violating these rules apply to everyone equally.
READ ALSO: SA Chicken prices are expected to rise due to the anti-dumping tariff
Chicken thighs cheaper than chicken necks
And, adds FairPlay, Australian drumsticks were cheaper than crow’s feet and processed meat paste, mechanically boned meat (MDM).
Then, in January, Australian thighs worth Rs 1 million were imported at a price even lower than Rs 8.74 / kg, increasingly cheaper than crow’s feet, which are classified as offal.
The latest Sars statistics show another price drop in February with a price of R8.71 / kg for Australian chopsticks worth R2.2 million.
The February price for Australian chopsticks was below the price of Brazil by R20.14 / kg, Spain by R10.56 / kg and the US price by R12.16 / kg.
The government just imposed anti-dumping duties on Brazil and Spain, but the US can legally dump the chicken here because they have negotiated a substantial quota free of anti-dumping duties.
FairPlay claims that even after the 62% tariff applicable to Australian bone-in servings, these chopsticks are coming here far below the South African producer price of R35.93 / kg for frozen chopsticks and R36.21 / kg for freezing. Individual rapid (IQF) chopsticks in December.
READ ALSO: The poultry association rejects the request for suspension of tariffs on poultry imports
How are these low prices possible?
How can Australian producers land chicken in SA at such low prices? According to Izaak Breitenbach, GM of the South African Poultry Association (SAPA), this is actually impossible and can only be explained as product dumping or under-declaration.
“These prices are lower than the selling price and the cost of production in Australia.”
How can drumsticks be cheaper than chicken necks?
Breitenbach says it’s impossible because drumsticks are a meat product and chicken necks are a by-product.
“It may just be that the chopsticks are under-declared to save on the payment of tariffs and the prices of the package go up because it does not have a tariff that allows them to offset the price of the basket.”
The problem is that there is still no anti-dumping duty on Australia. However, there is a most favored nation (MFN) duty of 62% on boneless portions and 42% on boneless portions. Sars is the authority responsible for paying the tariff.
READ ALSO: Anti-dumping duties on poultry imports are a win for local poultry farmers
How the dumping affects local chicken farmers
Local chicken farmers are not happy with this. Breitenbach claims that it cannot compete with these extremely low prices, although it is a globally competitive industry.
“This causes small farmers to fail and large companies not making enough money to reinvest in the sector.”
He says this causes economic decline and job losses, not only in the poultry industry, but also in the feed manufacturing and grain industries that rely on the poultry industry for growth.
Local chicken farmers have already faced higher input prices, with feed prices increasing by 20% since April last year due to rising corn and soybean prices on the global market.
Breitenbach says this has put upward pressure on poultry meat prices, while other cost increases on fuel, grain fertilizer and packaging have added to their problems.
Chicken prices have risen 17% since April last year due to the 20% increase in feed prices.
Breitenbach points out that feed makes up nearly 70% of all input costs for chicken farmers.
READ ALSO: “The SA poultry industry needs help, not protection”
Anti-dumping tariffs
He says the tariffs are designed to level the playing field and primarily to prevent dumping.
“The remedy for dumping is anti-dumping duties and we currently have anti-dumping duties on nine countries. Dumping is widespread and the amount of these duties ranges from 6.5% to 265%.
Less than 30% of all chicken meat is imported, but Breitenbach says import tariffs are really necessary.
“In the general plan or the growth plan of the sector, dumping is defined as an under-declaration of prices and an incorrect declaration of the product under the wrong tariff heading to reduce the payment of tariffs.”
Dumping is the sole cause of the ailing industry, he says.
READ ALSO: Higher prices of chicken and red meat are also on the menu for consumers
Other problems for chicken farmers
The war in Ukraine also affects chicken prices in South Africa as corn and soybean prices are determined by the Chicago International Trade Council.
“Since Ukraine is a net exporter not only of fertilizers but also of corn and soybeans and since the war has disrupted their logistics, it is causing a reduction in the supply of corn and soybeans on the global market, driving up the prices of feed “.
The reduced supply of fertilizers is also causing a rise in fertilizer prices and therefore a fall in corn and soybean prices.
Chicken has always been a low-cost source of protein for low-income consumers. Won’t the tariffs make imported chicken too expensive for low-income consumers? Breitenbach says that if imported chicken becomes too expensive, consumers will buy more locally produced chicken.
He says it is a problem that the United States can export 70,000 tons of chicken to South Africa without tariffs and duties, even at prices equivalent to dumping.
“Essentially, the African Growth and Opportunity Act (AGOA), a US trade act, was imposed on the industry, causing” legal dumping “that is hurting the industry.”
READ ALSO: The food basket increases by 10% in one year, cutting down on nutritious food for poor children
What about low-income consumers?
Breitenbach says we should worry about low-income consumers who get nearly all of their protein needs from chicken and simply want the cheapest way to feed their families.
“The local industry is globally competitive and has been providing cheap chickens to the masses for the past 90 years. We don’t have to sacrifice this long-term benefit for short-term gain. The tariffs have not so far caused chicken prices to rise and so the current strategy is helping to provide low-cost chicken. Our South African rand can’t buy cheaper chicken anywhere else in the world. “