The Association of Meat Importers and Exporters (AMIE) into the South African chicken industry, a decision to implement massive tariff increases of up to 82% on chicken imported from non-EU and SADC countries, could see shortages occurring in local markets which domestic producers may not be able to meet.
The South African Poultry Association, which represents many of South Africa’s large poultry producers, has applied for tariff increases against imports that range from 12% to 37%, to a flat 82% to be introduced to protect local industry from imports.
AMIE says the research it commissioned, from FTI Consulting, shows that significant tariff increases in an industry which is already highly protected would result in chicken volumes available locally potentially dropping by more than 44,650 tons (based on conservative assumptions) if current proposals are accepted.
The drop in volumes will result in higher prices and an estimated loss in GDP of R1.1bn in the first year following an increase in tariffs. This will be accompanied by rising unemployment, which will cause a further drop in domestic consumption and investment.
Also, due to job losses resulting from elsewhere in the value chain (e.g. distribution or processing of meat), the proposed tariff increase will lead to potential job losses of 1,440 across the economy. These results are in line with several recent studies on increased trade protection in the US, Indonesia and Mercosur countries, which estimated a negative impact on these countries’ GDP, household consumption, and employment.