Frozen Chicken ‘General’ Duty Increase - Comment due

On 30 November the International Trade Administration Commission of South Africa (Itac) published a notice for the proposed increase in the ‘General’ rate of customs duty, in Part 1 of Schedule No1 to the Customs and Excise Act, 1964, on frozen meat and edible offal of fowls of the species Gallus domesticus (that is chicken to you and me), classifiable in tariff subheadings 0207.14.1 and 0207.14.9, from 12% ad valorem and 37% ad valorem, respectively to 82% ad valorem.

South African Poultry Association (SAPA) reasoned that:

(i) The Southern African Customs Union (SACU) poultry industry (meat and eggs) supplies more than 60% of the animal protein consumed in SACU and makes up almost 20% of South Africa's agricultural gross domestic product (GDP). It is the single largest part of agriculture in SACU and is core to SACU food security;

(ii) The poultry industry is the second biggest user of maize in the region and by far the biggest user of soybeans. The South African Government's soybean development strategy is dependent on the success of the SACU poultry industry;

(iii) The SACU domestic broiler industry directly employs at least 47 025 people with a further 58 383 people indirectly employed in support industries that are dependent on the broiler industry. The crops which are used as feed in the poultry industry account for approximately 17 738 workers in the crop farming sector;

(iv) SACU is a globally efficient producer of chicken. Despite this, the SACU poultry industry has faced, and continues to face, enormous profitability challenges. These have resulted in downsizing in late 2016 and early 2017, resulting in job losses and a deterioration in SACU's food security position;

(v) The profitability challenges experienced by the SACU Industry are directly linked to increasing volumes of opportunistic imports of frozen chicken

(vi) Dutiable imports of frozen chicken have increased drastically over the period 2015 to 2017. This has caused and threatens to cause the serious injury; and

(vii) These low-priced imports limit the SACU industry’s ability to increase prices in line with the increases in costs (price suppression) and also reduce sales volumes and market share (as there is a preference for the lower-priced imports). The SACU industry has limited storage capacity and export opportunities. This means that when these opportunistic imports enter the SACU market, the SACU industry is forced to lower its prices in order to sell stock and create storage capacity.

Comment is due by 28 December.

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