South African chicken producers have been raising their concerns recently about the abundance of poultry imports, particularly from Brazil, which have been killing their business.
Leading producers such as Afgri, Astral Foods and Rainbow Chicken, have felt an impact on their profits. The result is that a few producers and the industry body have teamed up to take action in the form of an antidumping case against Brazilian imports. They accuse Brazil of selling whole chickens cheaper in SA than in their home market.
The Brazilians have believe they are right, however and are prepared to take the case all the way to the World Trade Organisation (WTO). Brazilian poultry association Ubabef has claimed the antidumping case is political and that SA is protecting inefficient producers to the detriment of the millions of people who can benefit from a cheaper protein supply.
According to the South African Poultry Association, in 1999 imports from Brazil reached 11,198 tons; last year the figure ballooned to 193,896 tons. Last year, about 73% of poultry imports came from Brazil. The closest competitor was Argentina with 10,3% and Canada with 7,1%. At this rate poultry imports are projected to reach an estimated 19,2% of consumption next year.
The Brazilians maintain that the trade partnership with SA can help keep prices stable and could complement the local production of poultry products to secure supply.
Ubabef says total imports by SA in the past decade have never exceeded 20% of the total produced in the country. Marketing relations manager Adriano Zerbini says: "Our market share in SA is not high, we do not want to harm local producers but they need our help to meet demand. If we really were that cheap wouldn’t we have a bigger share of the market?"
Ubabef markets director Ricardo Santin says since the public in SA has become aware of the practice of injecting chicken with water and still charging by weight for what essentially is water and not just meat, chicken producers in SA have had to change their game plan. "Brazil does not inject chickens with brine, this is why SA has found itself suddenly uncompetitive.
The International Trade Administration Commission of SA will now test whether Brazil is dumping. That could take up to a year to complete. If either party is unhappy with this investigation they may approach the WTO dispute panel.
Source: Business Day