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Blog: 1 February 2017 (Is the USA dumping poultry in SA)
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In the news recently has been a lot of noise and rumors regarding SA chicken imports (or parts of chickens) from various countries, when the local industry can in fact supply all of South Africa's poultry needs. The problem comes in when one looks at the price these "chickens" are brought into South Africa. Local producers cannot supply chickens at the same price as the imported ones profitably. Which leads one to believe that these "chickens" or the "off cuts" are being dumped on the South African market.
The lack of profitability at imported chicken prices has been as being reported recently,leading to job losses in the industry, that should be job creator as we can supply enough poultry to the SA market, but South African firms (retailers and wholesalers) are importing roughly 25% of all chicken sold in South Africa. And this with South Africa's unemployment rate sitting at record levels (See unemployment per Metro article here) |
Of particular interest to those watching development is the newly agreed upon terms of SA's AGOA deal with the USA, in which there were last minute efforts from South Africa to get the revised trade talks (in particular related to poultry imports) sorted out so that trade can continue unabated. A lot of industry players cried fowl (no pun intended) and said the terms will make it impossible for local suppliers to be competitive. So is the US dumping poultry in SA or not? That's the real question. We take a look below.
Based on data from Comtrade (the United Nations International Trade Database) the bar chart above shows the average price (in Rands) per Kilogram of poultry, imported by the UK, France and South Africa. Thus we covering a market that uses the Pound, The Euro and then the South African Rand. Based on the Pound and Euro's exchange rate levels we converted the price paid per kilogram of poultry imports from the USA by these countries in South African Rand to make it comparable with the price per kilo that South African firms are paying.
From the graphic above it is clear that the price paid per kilogram of poultry imported from the USA varies vastly for the three countries in question. However looking at the average price paid per kilogram over the period from 2012 to 2015 we see the following average price paid per kilogram of poultry.
UK: R16.21
SA: R11.48
France: R20.08
Now this clearly shows that the average price paid per kilogram of poultry by South African importers is WAY less than that of the UK and France, which leads one to believe that the poultry guys certainly have a case when claiming poultry is being dumped in South Africa.
Did the South African government sign the new AGOA agreement with the US while knowing that the USA is basically dumping poultry in SA? And with the new agreement the USA is allowed to offset more poultry in SA than they used to in the past. Making life even harder for the poultry industry in South Africa.
We suspect the SA government signed the revised AGOA poultry deal with USA knowing full well that they are dumping it here, but is turning a blind eye as they were scared not signing the revised deal would mean they are losing out on AGOA and a big market for South African exports.
UK: R16.21
SA: R11.48
France: R20.08
Now this clearly shows that the average price paid per kilogram of poultry by South African importers is WAY less than that of the UK and France, which leads one to believe that the poultry guys certainly have a case when claiming poultry is being dumped in South Africa.
Did the South African government sign the new AGOA agreement with the US while knowing that the USA is basically dumping poultry in SA? And with the new agreement the USA is allowed to offset more poultry in SA than they used to in the past. Making life even harder for the poultry industry in South Africa.
We suspect the SA government signed the revised AGOA poultry deal with USA knowing full well that they are dumping it here, but is turning a blind eye as they were scared not signing the revised deal would mean they are losing out on AGOA and a big market for South African exports.