Photographer: Dhiraj Singh/Bloomberg

EU Sees No Economic, Legal Basis for S. African Chicken Duty

  • South Africa imposed duty while probing dumping allegations
  • Europe trade head says South Africa faces structural problems

The European Union’s executive arm accused South Africa of unfairly protecting its chicken industry with import duties that mask local producers’ inability to compete in global markets.

South Africa imposed a temporary 13.9 percent so-called safeguard duty on bone-in chicken pieces in December, following allegations from its farmers that European producers are dumping dark meat which they can’t sell at home.

The European Commission sees “no clear economic and legal grounds to justify the imposition of the bilateral safeguard measures,” EU Trade Commissioner Cecilia Malmstrom said in a Jan. 11 letter to Rob Davies, South Africa’s trade minister. The letter was published on the Commission’s website.

“It appears that the real problems of the South African poultry industry are not so much caused by the imports from the EU but that it is rather suffering from structural problems affecting its competitiveness,” Malmstrom wrote.

South African producers have warned that their industry could be destroyed by an influx of under-priced European chicken and urged authorities to restrict imports. The International Trade Administration Commission of South Africa is investigating accusations of dumping by EU nations and will make recommendations to the Department of Trade and Industry, spokesman Sidwell Medupe said by phone. Davies will then take a decision on whether to maintain, raise or lower the duties.

Job Cuts

Given Europe’s preference for chicken breast, the continent’s farmers sell white meat at a premium and the dark meat is essentially a waste product that’s sold in South Africa at below cost, according to Kevin Lovell, chief executive officer of the South African Poultry Association.

“We are the EU’s largest waste-disposal market at present,” Lovell said by e-mail. “If the EU thinks we have got the law wrong then why do they not take it on review in a proper forum?” such as the World Trade Organization, he said.

RCL Foods Ltd., which was the country’s biggest poultry producer before it cut output last year, has made annual losses averaging 50 million rand ($3.7 million) in the last five years in its chicken division, Scott Pitman, the managing director of RCL’s consumer division, said by phone. The company is cutting 1,350 jobs as part of plans to reduce its workforce by 20 percent.

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