Clarity - Creation of a temporary poultry rebate

08 Feb 2024

It is with a degree of concern that we note recent comments in the media, which suggest ‘dismay’ and even ‘anger’ at the recommendation by the Commission on a temporary rebate on poultry products. It may be worth clarifying a few key matters, which may go some way to allay some of the concerns and better inform the public. In light of the diverse reactions from affected stakeholders, ITAC wishes to reiterate the following key points:

The Origin of the Poultry Rebate

The Minister of Trade, Industry and Competition directed the International Trade Administration Commission of South Africa in terms of section 16(1)(d)(ii) of the International Trade Administration Act, Act 71 of 2002 (“ITA Act”), to consider the creation of a temporary rebate provision on meat and edible offal, fresh, chilled or frozen of fowls of the species Gallus Domesticus classifiable under HS0207.1.

The directive followed the Department of Agriculture, Land Reform and Rural Development (“DALRRD”) confirming the outbreak of Highly Pathogenic Avian Influenza (“HPAI”), which forced the culling of millions of fowls at great lost to key players across the poultry value chain. During its investigation, the Commission considered the information at its disposal including comments received from interested parties, to arrive at its recommendation, as outlined in Report 726, which can be accessed here

 What is the extent of the rebate?

Poultry products under tariff subheadings 0207.14.1 and 0207.14.9 will be rebated to 2019 ordinary customs duty levels, while all other products under tariff subheading 0207.1 will be rebated duty-free for low-income consumers, as detailed in the table below.

The temporary rebate does not apply to anti-dumping duties and furthermore, is not a full rebate in some product categories, such as bone-in cuts (0207.14.2) where importers will still have to pay a duty of 37% as shown in the table above. This is to ensure continued protection for domestic poultry producers against unfair trade practices and injurious imports.

The volume of the TRQ for the first 6 months was determined to be 86,000 tons, which may be equally divided into two 3-month periods i.e. 43,000 tons per 3-month period, with the permits administered on a 3-month basis over the first two 3-month periods at 43,000 tons per 3-month period.

As clearly stated in the Guidelines the issuing of permits under the rebate provision may be discontinued if domestic production has satisfactorily recovered from the HPAI outbreak. The issuance of permits under the rebate provision may be discontinued based on assessments by DALRRD and the National Agricultural Marketing Council (“NAMC”) regarding domestic producers' recovery from the HPAI outbreak.

Furthermore, the rebate may also be suspended in an instance where the Ministers of Agriculture, Land Reform and Rural Development advise the Commission that the outbreak is under control and ‘domestic production has returned to levels which safeguard food security in SACU’.

In this regard, monthly updates on production and the path of the outbreak will be provided by DALRRD. One such Report, dated 19 January 2024, highlights the following –

1. The share of the HPAI outbreak by strain is concentrated on the H7 variant (H7 has 113 outbreaks versus 26 outbreaks of H5), with the outbreak to be found largely in Gauteng;
2. In the case of the H5 virus, just over half of the outbreaks have been reported to State Veterinary Services as resolved (57.7%), whereas less than a fifth have been resolved in the case of the main H7 outbreak (18.6%);
3. Just below a third (31.3%) of the H7 outbreaks in the 'epicentre' (Gauteng) had been resolved by the end of December 2023; and
4. The 'peak' of the outbreak seems to have passed (for both strains). DALRRD observed that, on average, 12 outbreaks were reported per week in August/September 2023 and while the outbreak is now seemingly tapering off, risks seemingly remain.

It should be noted that ITAC interventions, in this case, are guided by the path of the outbreak and the associated responses in market inventories and stock levels.

Application Process and Timeline:

Applications for the rebate provisions opened on 30 January 2024, following the publication on 26 January 2024 in Government Gazette No. 50042, Notice 2291 of 2024. Interested parties have a 10-day window to submit applications, with further details available on the ITAC website at Applications are already being received, indicating a proactive response from stakeholders.