Ebrahim Patel, South Africa’s minister of trade, industry and competition, should beware of the law of unintended consequences, the global FairPlay Movement has warned.
FairPlay noted in a commentary on the matter that because Patel reportedly believed it would raise chicken prices at a time of high food price inflation, the minister had approved, but delayed for 12 months, the imposition of anti-dumping duties against chicken portions from Brazil, Denmark, Ireland, Poland and Spain.
However, FairPlay founder Francois Baird said that applying the duties would have had little or no effect on South African chicken prices as importers did not always pass on the cheaper cost of produce. The losers will be South African poultry producers and the government’s poultry master plan.
Fairplay warned that the move simply invited a deluge of dumped imports that would do untold damage to the credibility of both Patel and the master plan he has driven since its inception.
“The delay is a ‘licence to dump’ for those five countries for the next year. They know that stiff anti-dumping duties are coming, so the incentive will be for them to ship as much of their surplus chicken portions to South Africa as they can before the gates close,” FairPlay said.
“They can bring it in at whatever impossibly low price they like and nobody will stop them. The ‘please dump here’ invitation applies only to Brazil at the moment, as all EU countries are prevented from exporting to South Africa because of bird flu outbreaks. As soon as those bans are lifted, they will be racing to catch up.”
Local producers have invested around R1.5 billion to expand production on the understanding that imports, particularly dumped imports, would be curbed in terms of the new master plan.
“The first to suffer from a new flood of dumped imports would be the small-scale black farmers encouraged by the master plan to set up or grow their businesses. South African consumers are also unlikely to benefit. Importers have not previously passed on to consumers the benefits of low and dumped import prices. Now Minister Patel has told importers to act quickly because they have a year in which to get even richer,” FairPlay said.
They believe Patel has been poorly advised and if he really wants to benefit the poor he should encourage cabinet to remove the 15% VAT from chicken portions most purchased by low-income consumers. FairPlay has been lobbying the government for VAT-free chicken, a move that will lead to an immediate drop in prices, since 2018.
Baird said Patel should “rethink, reconsider and reverse his decision”.
The FairPlay Movement is a not-for-profit trade movement that fights for jobs. Its goal is to end predatory trade practices between countries so that big and small nations play by the same rules. It supports the principle that penalties for transgressing those rules should apply equally to everybody.
Baird is a South African by birth who lives in the United States but still has interests in South Africa. He founded FairPlay in October 2016 after stepping down as the Africa chairman of Edelman, the world’s largest public relations company.