US chicken deal ruffles feathers

The resolution of the bitter battle between local poultry producers and their United States (US) counterparts, removing one of the biggest barriers to South Africa’s unrestricted inclusion in the renewed African Growth and Opportunity Act (Agoa), has ignited new fires. South Africa’s alternative import sources are concerned that they may be pushed out into the cold once the market re-opens for US chicken imports. And according to FTW sources, US free access still does not guarantee automatic unrestricted Agoa re-entry – the 30-day out-of cycle review on SA’s unrestricted eligibility is still on the table. Dave Wolpert, CEO of the Association of Meat Importers and Exporters (Amie), said that Brazilian and European Union (EU) exporters had already expressed concerns to him that that they would be adversely affected if the US gained free market access to the South African market. “We are pleased that the US market has reopened, but it must be noted that market demand has been static for three years. Duty changes will therefore simply mean that South Africa will import from another source market,” he said. Poultry exporters from the United Kingdom (UK) are also concerned about the impact of free market access for the US. “The South African market has been a growing market for us,” said Maire Burnett from the British Poultry Council. “In 2011 we shipped 20 000 tonnes. By 2014 this had grown to 43 000 tonnes, with a value of £36m.” She said that trade was disrupted in late 2014 and early 2015, as the country imposed a blanket ban on UK poultry following the outbreak of avian influenza in east Yorkshire in November. But this ban was lifted in late March. “It’s good that we are back in South Africa, but it is only a matter of time before the US is back in too, and that will have a significant impact on the market,” said Burnett. She added that the UK product could struggle to compete, given the strength of the pound sterling and the imposition of import duties on British chicken by South Africa in 2014. Trade and industry minister, Dr Rob Davies, has widely acknowledged in several media interviews that poultry producers will take a hit once the market reopens to the US, telling Business Day: “The poultry industry is not benefiting but the benefits to the economy as a whole are obviously larger than the price we paid in the poultry sector. So we should credit the poultry industry for having come to the party and being part of the process.” In an interview with Reuters news agency, Davies also acknowledged that there would be job losses but that they would be “within the range of tolerability for the industry”, noting that the job losses would be offset, to some extent, by those created when companies – mostly black economic empowerment companies – are awarded contracts to package and process the imported chicken. Local poultry producers already took a hit when the news broke last week and their listed shares were down. Listed company Astral Foods – which saw its shares fall by just over 4% on Monday 8 June – said in a statement that local producers could be “seriously affected” by the 65 000 tonnes per annum quota extended to the US due to the additional volumes of chicken products f looding the SA market. South African Poultry Association (Sapa) CEO, Kevin Lovell, told FTW that it was always good when a dispute was resolved and that the poultry producers’ association was finalising its submission to the International Trade Administration Commission (Itac). INSERT & CAPTION Brazilian and European Union exporters have already expressed concern that they will be adversely affected. – Dave Wolpert