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Feathers Fly as Chicken Tariff Battle Rages

08 July 2013

SOUTH AFRICA - Merlog Foods, an importer and wholesaler of frozen and chilled food products, has applied to the International Trade Administration Commission (Itac) for a reduction in the import duties on chicken carcasses and offal.

According to BusinessDay, the company said on Thursday (4 July) it had submitted the application to Itac on Wednesday (3 July).

The application comes days before Itac concludes its inquiry into an application submitted earlier this year by local poultry producers asking for a significant increase of up to 82 per cent on five categories of frozen chicken meat imports in an effort to stem the stream of lower-priced imports.

Merlog’s bid was brought on behalf of the Association of Meat Importers and Exporters (Amie). Amie wants the duty of 27 per cent on both products scrapped. Amie said it wanted these products, predominantly bought by the poor, to remain affordable.

Meanwhile, the South African Poultry Association (Sapa) has made its final submissions to Itac requesting significant tariff increases to be imposed on imported frozen poultry meat.

The commission will meet on Tuesday (9 July) and make a recommendation on the poultry association’s bid to Trade and Industry Minister Rob Davies.

Sapa CEO Kevin Lovell said on last week that it had submitted three responses relating to the submissions made by Amie based on a new report by PwC, compiled on behalf of Sapa, that sets out the pricing data.

It further submitted additional information requested by Itac on cost allocations of the different producers and responded to a request by Itac made to Amie and Sapa for additional information.

Amie has already made two separate supplementary submissions to counter Sapa’s application, claiming to have found numerous mathematical errors in the revised documentation it received from Sapa, which would affect the final proposed duty calculations substantially.

Mr Lovell denied any errors and said Itac would, after investigating the industry independently, verify all the information supplied to it by the interested parties and draw its own conclusions before making a recommendation to the minister.

The "chicken war" has been characterised by counter-accusations between Amie and Sapa.

Amie has requested Mr Davies mediate in the matter, but was advised in a letter from the minister that it would be inappropriate as Itac was still investigating.

Argentinean ambassador Carlos Sersale di Cerisano also stepped into the fray, saying the targeting of developing countries such as Argentina was unfair and discriminatory and did not promote the concept of South-South co-operation.

He earlier warned that South African importers, which now obtain birds from countries such as Brazil, Argentina and the US, could opt for supplies from the European Union. The local poultry industry is asking for tariff increases up to the maximum rate negotiated at the World Trade Organisation (WTO).

It claims South Africa has the most unprotected market in the world, yet its opponents claim that it already enjoys a 27 per cent import duty on most of the categories that it is pushing for tariff increases on.

Itac has earlier indicated that its investigation is conducted within the domestic policy framework and it "is consistent with the negotiated WTO-bound most favourite nation ceiling rates."

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