Foreign birds to cost more

2013-10-01 00:00

CHICKEN prices on cuts typically sold to upper income markets are likely to rise due to a massive hike in import tariffs.

But for most South African consumers the impact on store prices is likely to be negligible, said Poultry Association of South Africa CEO Kevin Lovell.

Chicken is a primary source of protein for most South Africans, particularly lower income groups.

Major producers have been lobbying to raise tariffs because cheaper imports, mainly from Brazil, have been decimating the profits of local producers and forcing smaller firms to close.

The Democratic Alliance said it opposed tariffs that protect uncompetitive behaviour to the detriment of consumers.

“The fact of the matter is that increased tariffs will result in more expensive chicken prices,” said the DA’s Wilmot James.

Trade and Industry Minister Rob Davies said yesterday import tariffs for poultry had been raised an average of 8,l75%.

Import tariffs for whole birds would see the biggest increase, from 27% to the maximum 82% allowed by the World Trade Organisation.

“We introduced a differentiated set of increases and the first one is what’s called whole bird … this is the upper income market, this is less than one percent of total poultry imports over 12 months and in this case we have imposed the highest duty increase.”

“What we call boneless cuts … mostly consumed by higher income households … this we’ve seen [local producers are] also at a price disadvantage and the tariffs increased from five to 12%,” Davies added.

Duty increases for carcasses, offal, and bone-in portions were less drastic.

Lovell said the new tariffs may result in higher chicken prices in only about six percent of the local market, while prices for the rest of the market may only be indirectly affected, if at all.

“Bone-in portions, these are for lower income segments … it’s about 70% of domestic production and the industry is at a significant price disadvantage,” Davies said.

“The import tariff is changed from a specific duty of 220 cents per kilogram to an ad valorem duty of 37%.”

This meant the import rate had changed from around 17% to 37% for bone-in chicken.

These white meat cuts represented around 54% of total poultry imports over the past year.

“In respect of carcasses … the conclusion was that the domestic industry is at a significant price disadvantage.

“This is a significant source of protein to lower income people and here the tariff is increased slightly from 27% to 31%,” Davies said.

Carcass imports represented about two percent of total poultry imports over the past year.

Import duties for offal were also slightly increased from 27% to 31%.

“Offal, the domestic industry is at a significant price disadvantage but this is an important source of protein to poor households,” said Davies.

The decision followed an application by the SA Poultry Association to the International Trade Administration Commission (ITAC) to increase the tariffs in March this year.

The tariff increases are effective immediately.

Lovell said while the tariff increases were welcome, the association was disappointed that the full tariff increases, as they had applied for, had not been implemented.

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