Amid the euphoria that accompanied last week’s news of the imposition of anti-dumping duties on chicken, for local producers there’s a caveat.
Minister of Trade, Industry and Competition Ebrahim Patel will be requesting the Competition Commission to monitor the prices of frozen bone-in portions closely. If there are price increases aimed at taking advantage of the introduction of the anti-dumping duties, he may request the minister of finance to suspend the duties for a period.
That’s according to a statement from South Africa’s International Trade Administration Commission.
Advocacy group FairPlay points out, however, that the minister will have to separate what he regards as duty-related price rises from the impact, at retail level, of increases introduced at producer level to recover increases in the multiple input costs that have beset poultry farmers over the past year. These include skyrocketing feed prices, which comprise 70% of a chicken farmer’s input costs, almost daily power cuts which disrupted production, and the impact of failing infrastructure such as roads and water supply.
Chris Schutte, CEO of Astral Foods, which is South Africa’s largest poultry producer, has pointed out that because of these rising input costs, producers have been selling chicken at a loss, subsidising consumers by more than R3 per kilogram.
The advocacy group cites analysis of retail prices during and after the six-month imposition of provisional anti-dumping duties last year by respected economics and competition consultancy Genesis Analytics, which said there was no evidence of “supra-competitive” pricing – ie profiteering. Far from it – producer price increases had not been enough to recover the constant increases in input costs.
“This indicates that supra-competitive producer prices did not prevail when the provisional duties were in place, and there is no reason to expect that they will occur in the foreseeable future,” Genesis stated.
And while anti-dumping duties generally apply in five-year cycles, this time they will apply for four years.
The reason, says FairPlay, is that the duties were approved last year and suspended for 12 months – and Patel has now included that year when dumping happened because the duties did not apply in the five-year enforcement period for the new duties.
