The war in the Middle East has halted the sale of SA processed poultry to the UAE, scuppering the sector’s drive to increase exports after it weathered a dumping threat that left local producers on the brink of collapse.
Under a master plan launched in 2019, the industry is now on a firmer footing after clamping down on dumping — when foreign producers sold poultry products in the country at lower prices than their normal value.
But efforts to boost exports, which account for just 2%-3% of annual output, have been knocked by the disruptions wrought by the conflict pitting the US and Israel against Iran, said Izaak Breitenbach, CEO of the Broiler Organisation at the SA Poultry Association.
“The major impact is that we would have actually met with countries in the Middle East in May, but all those potential export discussions were cancelled,” he said.
“The second impact is that we are actually exporting cooked poultry to the United Arab Emirates, but those exports have now stopped due to the war.”
Boosting exports is a key component of the second phase of the poultry master plan, which turned around the fortunes of an industry that had grappled with cheap exports from Brazil, the US, UK, Germany, Hungary and Poland.
“If we look at the period pre-2019, the industry for 10 years was in distress and imports escalated. With the master plan, we diagnosed that the root cause of the problem was dumped chicken,” Breitenbach said.
“Brazil was a big one. They were dumping chicken significantly, at about 30%-50% of their own production cost. So it was heavily subsidised.”
“Since then we’ve applied for antidumping duties against nine countries and that has stopped the flooding of unfair trade. And since we’ve stopped unfair trade, the industry has grown 26% and has, to a large extent, replaced imports.
“We’re now globally competitive; Brazil is marginally more competitive than us, but we’re not concerned about normal imports. We do have an antidumping duty against Brazil and that mitigates the problem.”
The industry is still fighting a rebate given to the US since 2015, which exempts it from paying antidumping duty on 65,000 tonnes of poultry imports in exchange for SA’s tariff-free access for selected commodities under Agoa.
At the launch of the second phase of the poultry industry master plan last week, the DTIC said had seen a “remarkable” advancement in transformation across the sector, with more black players entering.
“The core pillars of phase two include achieving exports of cooked meat and local demand increase strategies, ensure effective trade measures, ensure biosecurity measures for local and export markets, and transformation of the entire value chain of the poultry industry,” it said.
The main priorities for the industry are to maintain the trade reforms in place and avoid a regression, to vaccinate against bird flu and boost exports to the UK, EU and Saudi Arabia.
According to the trade department, the R74bn poultry industry is the largest contributor to SA’s agricultural sector, employing more than 110,000 people across its extended value chain. - Business Day