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A roost in the right direction

Rob Davies says local poultry production has dropped by 9.5 million kg in recent years.

Trade and Industry Minister Rob Davies. Picture: GCIS

JOHANNESBURG - Trade and Industry Minister Rob Davies says the decision to hike tariffs on imported chicken has been made in the interest of trying to promote local food security and local jobs.

The Department of Trade and Industry announced on Monday that tariffs would be raised with immediate effect on five types of imported chicken in order to protect local breeders from a flood of foreign goods.

A maximum tariff of 82 percent has been levied on whole bird imports.

But some meat importers estimate chicken prices could go up by between 30 to 50 percent if maximum tariffs were applied to all poultry imports.

Speaking to Talk Radio 702's John Robbie on Tuesday, Davies said the issue becomes complicated because the different types of chicken products all have different tariff regimes.

He said the industry has seen a huge surge of imports in the last few years which has had an adverse effect on local production.

"The figures tell us we've seen a drop between 2010 and 2012 of local production of 9.5 million kilograms and have seen an increase of 61 million kilograms in imports."

Davies said the tariffs have been raised differently.

"Basically, the reality of the world chicken market is that rich customers eat the whole bird and unboned white meat and poorer customers eat bones, offal and carcasses. So what we've done is put higher tariff increases on the upmarket products and lower tariff increase for low-income consumers."

When asked how it can be cheaper to import chickens from emerging countries such as Brazil as opposed to producing locally, Davies said this is due to the off-cuts not really being sellable in the developed world.

He said increased tariffs haven't been placed on chickens from the European Union (EU) due to the free trade agreement between the regions.

"What we are trying to do there through the framework of the Economic Partnership Agreement negotiations is put a much more robust agricultural safeguard measure against surges and imports."

Davies said the decision won't have an impact on South Africa's relationship with Brazil and he had discussed this with his Brazilian counterparts prior to making a decision.

"The Brazilians were more concerned about whether we could sustain an anti-dumping duty because they've been threatened with that by lots of people across the world. The general tariff adjustments were something they don't like but it's perfectly legal for us to do so. They've accepted that we are within our rights".

Davies said from a food security point of view, government has taken the position that food security can't be provided through importing.

"The reality needs to change. We need to be producing a significant part of our own consumption. Chicken is something which can be developed locally and small players can come in."

Davies said there will be an early review of the decision.

"This is supposed to encourage the industry to grow, to become more competitive, and not be a barrier behind which they can carry on with uncompetitive behaviour."

EFFECT ON CONSUMERS

Speaking to 567 Cape Talk's Kieno Kammies on Tuesday morning, Kevin Lovell, CEO of the South African Poultry Association (Sapa) said only six percent of the consumer base will be affected by the hike.

He said there are two main reasons why it's cheaper to bring chicken into the country.

"A lot of the stuff that comes here is dumped - not all of it but most of it, and we pay more for maize and soya than our competitors in the United States and Argentina."

Lovell likened the chicken trade to the purchasing of motorcars, saying people who buy vehicles in South Africa are likely to pay more than they would if they'd purchased the vehicles in their countries of origin.

He said South Africa has a good industry as a result of that and the poultry industry is similar.

Lovell said a very small amount of poultry is imported and it's not all 'doom and gloom' as it's perceived to be.

He said while 94 percent of poultry is actually produced in South Africa and consumed in the country, there is still a problem with job losses.

"The percentages are small but it's a couple of hundred million chickens in total that is brought into the country each year. That has a destabilising effect on the market."

Lovell said locally, the ability to change chicken prices is limited.

But he said the raised tariff on chicken imports is not a free ride for the local industry.

"This is not a get out of jail free card because the retailers still have the power."

Timeline

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