Written by David Wolpert
|
07 May 2012
DUMPING FACTS
The Great Chicken Conspiracy
SA is,and always has been, a net importer of meat,dominated by chicken,which is an affordable form of protein essential to feeding a growing population.
The South African domestic poultry industry is the largest industry in the agricultural sector,and arguably the most profitable.
Local poultry producers have been waging an ugly and increasingly belligerent war against importers for some years,by attempting to invoke protectionist trade restrictions, and also by mudslinging in the media.
Numerous chicken anti- dumping actions have been applied for and threatened. A sizeable dumping duty on USA chicken already exists.
The most recent action has been an anti- dumping action against certain Brazilian chicken imports, which has provisionally been approved by ITAC,and implemented by customs.
The quantum of these provisional duties is:
Whole birds -62.93%
Boneless cuts-46.59% (in the case of one small supplier, the duty is lower-this has no significance in the market place).
These provisional duties were decided upon by ITAC, despite the fact that there is a huge amount of misrepresentation and manipulation of statistics taking place, and the import figures used by ITAC for purposes of making their ruling were significantly overstated.
Claims of huge volumes of imports of the relevant products,and the resultant injury suffered by local poultry players are simply untrue,and bear no relationship to the facts.
The true figures are that,despite extravagant claims being made by local industry, the current figure for imports of the two products from Brazil,as a percentage of local chicken consumption,was approximately 1.5% in 2011.
So how can this tiny volume of imported chicken from Brazil threaten and injure a huge and thriving local poultry industry?
It simply defies logic.
In addition to the use of incorrect statistics, the large majority of submissions made by SA importers as well as Brazilian exporters were ruled “deficient” by ITAC for very spurious reasons, and were thus completely ignored by them in arriving at their conclusions.
A submission made by the Brazilian Government was also ignored.
ITAC also ignored numerous provisions of anti- dumping acts and agreements as legislated in SA, as well as many of their own regulations.
The International trade Administration Act (ITA),The General Agreement on Tariffs and Trade (GATT),The Geneva General Agreement on Tariffs and Trade (The Geneva Act) also regulate the powers and responsibilities of ITAC regarding any application to institute an anti-dumping duty,and it is very clear that many of the relevant provisions were blatantly ignored and/or breached.
ITAC also ignored numerous communications from the import industry as well as the Brazilian Government that clearly pointed out to them the incorrect and incomplete information which formed the basis of their conclusions.
In fact, the investigation and its conclusions were very patently flawed.
Any doubts about this statement,or the above claims of the use of incorrect statistics, and the non -consideration of vital information, would be instantly dispelled by a reading of ITAC’s public documents which include all non- confidential submissions and correspondence.
The immediate result of the anti-dumping ruling has been a sizeable increase in local poultry prices, paid for by hard pressed consumers.
Local industry has made much noise in the media of late,regarding the surge of chicken imports into SA over the last year.This is nothing more than misleading in that they intentionally ignore the fact that imports of chicken actually dropped by 26 per cent over the period 2006 to 2010,and only started rising again in 2011,and in real terms,total South African chicken imports,excluding mechanically deboned meat, which is not produced in SA,and which is used in the manufacture of sausages and polonies,has declined over the last six years.
With regard to mechanically deboned meat (mdm), once again, in an obvious attempt to mislead, the import figures for mdm are always included in import volumes quoted in both the media and financial reports of leading local poultry players, when attempting to show the “huge threat posed by imports”, when every player in the industry is aware that mdm is simply not a comparable product and has an entirely different use in the production process
The local industry has been granted a very significant level of protection and is also openly working to add significantly more protection outside of Brazil as evidenced in recent SAPA (SA Poultry Association) newsletters This is a problem (even outside of AMIE's subjective view) in that over-protected industries rapidly become a burden to the consumer. The AD legislation requires that in order to succeed with an application for protection,injury must be suffered. Clearly this is not the case, and this is not an industry like clothing which genuinely is on the brink of disaster .Rather, this is an industry which is a darling of the investment community and which has posted exceptional results for years.
From our perspective we see an industry indulging in some rather questionable practices,and which is essentially asking for protection so that it can continue to make exorbitant profits,financed by the consumer.
Let us not forget that the relevant imported chicken, pre the provisional dumping duties, already bore the shipping and logistics costs applicable to all imported products, and also an import duty of 27% which in itself is protectionist.
To a large degree the local industry is riding on a wave of sentiment which believes that all things produced locally are good and create jobs,and that all imports are bad and economically destructive.
This perception is simplistic,and it is very clear that if ITAC confirms the provisional protection, it is assisting an industry that obviously needs no further protection.
The subsidy is being given to an industry already performing so well that it is regularly recommended by many analysts as one of the best industries in which to invest.
As regards the oft repeated claims that buying locally would create jobs, if one looks at recent information published by local industry, it appears as if mechanisation is a far bigger threat to jobs, than is any other factor.
Job creation and it’s economic effects are a very emotive issue, and rightly so,but when looking at hard facts in this case,a reduction in imports,with resultant consumer price increases that are already evident,and their domino effects,will surely cause a net job loss to the country.This will be exacerbated by job losses in the import and related industries.
Any comparisonAny comparison between clothing imports from China, and chicken imports to SA, is simply a red herring.
Any comparison between clothing imports from China and imports of chicken is merely a red herring,that critics of imports love to hang their collective hats on.
China has assumed market dominance in SA due to local inefficiencies.In the case of poultry, a small, but efficient import industry has kept chicken inflation in check until the latest rulings,whilst at the same time providing much needed protein to our burgeoning and poor population at an affordable price.
Then there is the issue of quality.Most local chicken, is injected with large volumes of brine, artificially increasing the bird’s weight, and simultaneously compromising on quality.
In fact, many countries, including Brazil, the largest exporter of chicken cuts to SA, but not whole birds as is claimed by local industry, prohibit this practice.
It is precisely this quality problem that has resulted in a number of major local food manufacturers and processors choosing to use imported chicken instead of local product in their manufacturing and processing plants.
In addition to the injecting issue,there have been a number of press disclosures over the last few years relating to both product labeling and relabeling contraventions of the law.This has included the repacking and relabeling of expired products.
To what extent are injection and labeling infringements detrimental to consumer health?
The information in this document is conclusive proof that:
*There is no chicken dumping into SA from Brazil
*ITAC’s dumping investigation and provisional rulings were fatally flawed and misguided
*Chicken imports to SA have kept inflation in check for some decades
*Prices of domestic chicken have risen on the back of the anti-dumping rulings
*Imported chicken is of a superior quality to locally produced comparable products
*The volume of imported chicken poses no threat to local industry, which is buoyant and highly profitable.
*Once again the poorer classes are being forced to pay for corporate greed and exploitation.
All of the above begs the question:
“Why has ITAC conducted this investigation in such an unprofessional, questionable, flawed manner in blatant breach of international and local anti-dumping legislation, agreements, accepted practices, and its own regulations”?
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