Chickenomics
Did you know that chickens account for 23-billion of the 30-billion land animals living on farms? In other words, chickens outnumber humans three to one.
On Monday, August 1, the International Trade Administration Commission of South Africa (Itac) released an inconspicuous Government Gazette titled ‘Notice of Conclusion of an Investigation into the Alleged Dumping of Frozen Bone-In Portions of Fowls of the Species Gallus Domesticus Originating in or Imported from Brazil, Denmark, Ireland, Poland and Spain’.
The notice followed the normal Itac structure, informing of the stages of the investigation, initiated on February 5, 2021, before citing its recommendation in the second last paragraph and concluding with the Minister of Trade, Industry and Competition’s recommendation. Itac's recommendation to impose definitive antidumping duties was approved by the Minister, as is the normal practice. However, the Minister considered “the current rapid rise in food prices in the Southern African Customs Union (Sacu) market and globally and the significant impact it has, especially on the poor, as well as the impact that the imposition of the antidumping duties may have on the price of chicken as one of the more affordable protein sources”. Consequently, the Minister decided to suspend the imposition of the antidumping duties for 12 months “in an effort to reduce food inflation”. You might now have reached that ‘so what?’ moment.
Well, consider this: antidumping duties are currently imposed on frozen chicken meat imports from Germany, the Netherlands, the UK and the US. This means antidumping duties are now imposed against two European Union countries, Germany and the Netherlands, but not against four others – Denmark, Ireland, Poland and Spain – and not against Brazil, but against the UK, and the US. Surely, this is discriminatory. I’m not sure how this will aid South Africa’s quest to conclude a free trade agreement with the US, its second-biggest trading partner and foreign investor. The UK, our fifth-biggest trading partner and investor, must be thrilled.
How does the Minister’s approach reconcile with the Poultry Industry Master Plan? Yes, there is a master plan, as the poultry industry is “South Africa’s second-largest agricultural industry at risk of anticompetitive behaviour”. The plan was developed in close partnership between government and several industry stakeholders, including poultry producers, processors, exporters, importers and organised labour. It is aimed at supporting, local businesses in line with the President’s Economic Reconstruction and Recovery Plan, which was tabled on October 15, 2020, and seeks to “guide South Africa towards economic recovery through stimulating equitable and inclusive growth”. Wait, there is more. In his State of the Nation Address in February, the President stated: “Through the implementation of the Poultry Master Plan, the industry has invested R800-million to upgrade production. South Africa now produces an additional one-million chickens every week.”
In an article published on February 27, 2021, Fin24 observed: “Ramaphosa's master plan looks to pluck small poultry businesses out of the doldrums”. And a www.zanewslive.com article of August 2 stated: “The tariffs are an important component of South Africa’s so-called Master Plan to protect local poultry producers from a flood of cheap imports and preserve jobs in the industry, which employs about 100 000 people.”
The South African Poultry Association says, its members have invested over R1.5-billion to expand poultry processing capacity in the Sacu industry, with a further R570-million earmarked for 2023, to support food security, job creation, rural development and more revenue for the fiscus.
Evidently, an ad hoc policy intervention in “an effort to reduce food inflation” trumps this. The Minister should have heeded the words of Australian Prime Minister Anthony Albanese: “Short-term thinking is the greatest enemy of good government.”
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