Keeping cheap Brazilian chicks in line with duties

Keeping cheap Brazilian chicks in line with duties

FMCG SUPPLIER NEWS

Business Day - Feb 14th, 09:47

The South African government is slapping additional duties of 6%-63% on Brazilian exporters of chicken into the Southern African Customs Union market — but insists this will not push up prices. 

Although complaints that Brazilian producers are dumping chicken in SA have not yet been proven, the authorities have already moved to protect local producers.

The additional duties will be imposed for the next 26 weeks until a preliminary investigation into poultry dumping by the International Trade Administration Commission — responsible for customs tariff investigations, trade remedies, and import and export control in SA — has been finalised.

The commission found enough evidence of dumping to ask the South African Revenue Service for increased duties on Brazilian chicken to prevent further financial distress to the domestic industry.

The commission did not foresee substantial price increases for consumers as a result of the anti-dumping duties on Brazil, Zoleka Xabendlini, senior manager of trade remedies, said yesterday. However, it did expect that the duties could result in reduced imports from Brazil, which currently supplied 44% of total imports of whole, frozen chicken meat and 94% of total imports of boneless cuts.

The range of cheaper products would decrease in SA should Brazil reduce its exports.

The commission found boneless, cut imports from Aurora Alimentos (one of the Brazilian producers) were 6,26% cheaper in the customs union market than in Brazil.

All other producers in Brazil were found to be dumping whole, frozen chicken at prices 62,9 % cheaper than their market, and boneless cuts were sold 46,5 % cheaper in the customs union market than in Brazil.

The application for an investigation into possible dumping by Brazilian producers was brought by the South African Poultry Association. Its chairman, Marius Gericke, said yesterday the association welcomed the findings.

It believed Brazilian poultry producers had not adhered to the principles of fair trade and had not accessed the South African market in an entirely fair manner. "We do not seek illegal protectionism in our aim of continuing to be the main source of affordable protein for the South African consumer," Mr Gericke said.

David Wolpert, CEO of the Association of Meat Importers and Exporters, said yesterday he remained convinced there was no dumping from Brazil. He had only received details of the International Trade Administration Commission report yesterday and would respond more comprehensively once he had studied it.

Ms Xabendlini said after the investigation had been finalised the commission would decide whether to impose the additional duties for five years, or whether the duties were too high, or not necessary at all.

The investigation so far had shown evidence of price undercutting, reduced growth rates and market share erosion. On the strength of those findings, the commission had decided to ask for the provisional additional duty payments over and above current duties of 27% on whole birds and R2,20/kg on boneless cuts.

The aim of antidumping duties was not to ban imports altogether, but to ensure that foreign producers competed fairly with domestic producers, Ms Xabendlini said.

Imports of whole frozen chicken from Brazil increased by 300% from about 3,3-million kilograms in 2008 to about 13-million kilograms in 2010. Imports from other countries grew by 180% in 2010. Imports of boneless portions from Brazil grew by 52% from roughly 16,6-million kilograms in 2008 to 25,4-million kilograms in 2010.