EU probed over chicken dumping allegations

21 Nov 2014
Business Report
Londiwe Buthelezi

Johannesburg - Three EU countries could be the next to face higher poultry import tariffs if the International Trade Administration Commission of SA (Itac) finds evidence that they have been dumping their chicken products in the country.

Itac initiated an internal investigation in October last year to probe allegations that the UK, Germany and the Netherlands had been dumping their bone-in chicken portions.

Bone-in portions include chicken parts, such as drumsticks, thighs and wings. These portions are consumed the most in South Africa and constitute 70 percent of local producers’ production volumes in the form of individually quick frozen portions.

Developed countries consume mostly boneless portions, such as breasts, and Itac said that in South Africa there was a low demand for these as they were expensive.

Siyabulela Tsengiwe, Itac’s chief commissioner, said the government agency had initiated an investigation in Europe and a preliminary determination of whether there was dumping was expected in “three months or so”.

In Europe, Itac will check whether the companies under investigation have been recording their costs correctly. If there was evidence that they dumped chicken, Tsengiwe said Itac might decide to impose provisional dumping duties that would be in place until a final determination was made.

“We will have to calculate how much the dumping tariffs would be. They would be directed at those specific countries and to specific firms within the countries. But if in that country other interested parties have not co-operated with us, there will be a residual margin that will apply to other companies too,” Tsengiwe said.

The investigation was prompted by an application from the SA Poultry Association, the same organisation that applied for the increase of poultry import tariffs that was announced by Trade and Industry Minister Rob Davies in September last year.

The new tariffs saw import duties for whole birds increase to 82 percent, which is the World Trade Organisation’s bound or maximum tariff rate. Duties for bone-in portions increased to 37 percent from 18 percent, while levies on boneless cuts only increased by 7 percentage points to 12 percent as imported volumes of these were small.

When the new import tariffs were announced, chicken products from all EU countries were exempted.

Yesterday Kevin Lovell, the chief executive of the SA Poultry Association, said EU countries were mostly exporting leg quarters to South Africa. He said they claimed that it did not cost them as much to produce leg quarters as it did to produce boneless portions, but their selling price was lower than their production costs.

“When a feed goes into the chicken, the cost of feeding the chicken goes equally to all parts, so what they are saying is not true. The fact that their selling price doesn’t reflect their costs is an act of dumping,” Lovell said.

But Association of Meat Importers and Exporters of SA chief executive David Wolpert said the body did not believe that EU countries were dumping any chicken.

“I don’t think there will be any dumping duties after the investigation. But if there are, it will depend on how much they will be. If they are high, we will have to consider all our options. We’ve already been severely affected by the rand weakness. Import volumes could come down a lot,” Wolpert said.

He said there was evidence that local poultry production was not enough to meet demand, so chicken prices could shoot up due to shortages.

Itac said South Africa had been a net importer of chicken for the past decade or more and the gap between consumption and production kept increasing.

South Africa produced 1.5 million tons of poultry products in 2012, while its consumption was approximately 2.2 million tons.