Brazilian producers accuse the local industry of lies, slander and disinformation. They profess nothing but love for this country and its consumers.
This concerted Brazilian response is interesting, because the tariff application does not specify Brazil, nor does it accuse Brazil of dumping chicken (although the local industry and FairPlay believe it probably does). The application is on behalf of Southern African Customs Union (Sacu) countries and seeks higher tariffs on chicken imports from non-EU trade groups.
One of these groups, South America’s Mercosur, happens to include Brazil.
Extensive reasons, including a surge of imports and harm done to the local industry and its jobs, are given for the application to increase tariffs to 82percent on bone-in portions (currently 12percent) and boneless cuts (currently 37percent). The application, relating to these two categories only and not to all chicken imports, is being considered by South Africa’s International Trade Administration Commission (Itac).
Brazil has reacted fiercely to the application. In January the Brazilian Animal Protein Association warned that South African consumers would pay for higher tariffs; this month the association changed its tune and said the tariffs would halt Brazilian imports “as it will render most imports unfeasible”.
This is clearly the real fear – a halt to what has become a rapidly increasing flood of Brazilian chicken imports, particularly in the last two years after bird flu bans stopped most European Union exports.
Brazilian producers have more than filled the gap left by the absence of EU chicken, ensuring that 2018 was another record year for chicken imports – to the despair of the local industry, which has been appealing for tariff protection.
Brazil now supplies more than 60percent of South Africa’s chicken imports.
Brazil and the EU have targeted the South African market for the same reason. Their producers make their profits from selling chicken breast meat at premium prices in northern hemisphere markets. This leaves them with huge surpluses of “dark meat” – mainly leg quarters – which they freeze and sell off in bulk at any price they can get.
These discarded cuts are popular in South Africa, and years of little or no tariff protection made this country an easy target. EU producers had it easiest of all because they were guaranteed duty-free entry to the South African market in terms of an economic partnership agreement with the EU. Now South Africa has secured a 35percent safeguard duty against EU chicken imports, which will soon resume as bird flu bans are lifted, and is seeking even higher tariffs against other countries.
Protectionism, screams Brazil, echoing earlier EU accusations. The fact is that these applications are made in terms of international trade law, which allows for duties to protect local industries against sudden import surges which harm local producers. Brazil and the EU fit into both categories.
Dumping is a separate issue. While EU producers clearly dump chicken in South Africa – EU production costs are up to 20percent more expensive, and the only way it can export to South Africa is to sell below cost – Brazil says its low-cost chicken producers are simply more efficient than anyone else.
This is partly true. Brazil has a huge meat industry, which benefits from economies of scale built up by years of agricultural and other subsidies. It has become a major chicken and beef exporter.
This doesn’t let it off dumping accusations. In 2012 – years before the latest surge – South Africa twice sought anti-dumping duties against Brazilian chicken. The applications were based on sound evidence of dumping.
Brazil claims falsely that the World Trade Organisation panel cleared them of the dumping charge. What really happened is that Brazil and South Africa agreed that South Africa would not pursue the application in return for Most Favoured Nation (MFN) tariffs on Brazilian chicken. These are the tariffs the SACU application seeks to increase.
Given the deliberate targeting of South Africa with a surge of exports, it is time for another investigation into Brazilian dumping. Despite its vaunted efficiencies, is Brazil selling chicken to South Africa below the real cost of production, or below their price in Brazil?
It will also be interesting to see the Brazilian response to suggestions that it is engaging in predatory pricing – selling chicken to South Africa at prices way below what it charges other countries in order to secure a market position here.
South Africa has not been the only victim of this targeted assault from Brazilian chicken producers. Uganda and Namibia are among African countries which have reported the devastating effect of Brazilian chicken imports.
Brazil has good reason to be concerned at the continued doubts about the safety of Brazilian chicken. The way to address this concern is not to attack the accusers, but to prove to the satisfaction of independent experts and SA authorities that Brazilian chicken is safe, and free of contamination by salmonella and other bacteria. Brazil’s food safety scandals, and continuing incidents of contamination, do not engender trust.
No amount of blustering will convince the world that Brazil has overcome its food safety problems, which included fraud and bribery to evade health checks. It will have to prove that it has done so – such is the level of distrust that the EU is demanding that Brazilian chicken be free of salmonella for a continuous six months before it will allow a resumption of imports from suspect suppliers.
This is why FairPlay supports the calls for a ban in Brazilian imports until they can prove their products are safe. South African consumers deserve nothing less.
They should also brace for howls of anguish, and another Brazilian campaign of half-truths and disinformation, if the application for higher tariffs on Brazilian chicken is approved. After all, if your argument weakens, shout like hell
Francois Baird is founder of FairPlay.