AMIE Presentation

Portfolio Committee of AgricultureCape Town

10 September 2013

• Part 1

• What is the status Quo– Impact of current tariffs on competition and

competitiveness– Implications of local industry tariff increase application on

importsPart 2

Status of Poultry tariffs and Implications to local industry and consumers

Part 3

Way Forward

• Part 1

• Status Quo– Five tariff Headings Current Requested Req Rands/kg

• 0207 12 20 CCS 27% 82% R 9.91• 0207 12 90 W/Birds 27% 82% R11.11• 0207 14 10 B/less 5 % 82% R 2.20• 0207 14 20 Offal 27% 82% R 3.35• 0207 14 90 B/in R 2.20/kg82% R 6.53

– Quality (SPS Measures)(SPS - Sanitary and Phyto Sanitary)

•Disease and bacteriological (imports top quality)•The import regime is extremely strict and honerous

– Volume of imports•Relation to consumption•Relation to brining

– Serial offenders•Comp Comm, Labelling, Brining, APS dispensations

Water sold as chicken every year twice the volume of imports!!

• Imported Volume compared to BriningAMIE Calculation of Waterless chicken

SAPA Quoted at SANCU AGMMt

Local Production 1 614 027

Total local Production 2 152 036

Water added (&sold as chicken) 538 009 =33% injection

Total imports 2012 238 000 <10% of consumption

Water as Percentage of imports 226.05 %

• Jobs– Local Jobs direct 5,000– Indirect (making consumer ready) 10,000These are real jobs which do exist

Other Agricultural Exports (retaliation)- Citrus Black Spot (EU)- Canned Fruit (Aus)

Addicted to Protection

• History of protection 1997-current– 1997 B/In R 2.20 (2 years)– 2001 USA Dumping– 2004 Duty Increase– 2006 USA Dumping Sunset Review– 2006-13 Brining (hugely profitable)– 2011 USA Dumping Sunset review (faulty ITAC)– 2012 Brazil Dumping application (PC DTI concerns)– 2013 Duty review (non EU)– 2013* DD EU (Holland and others)– 2013 SPS request to DAFF (Underhand)

• Impact of current tariffs on competition and competitiveness• The large producers are squeezing out all competition

(local and imported)Local competitors are limited in access to Genetic material, Feed, Distribution channels etcLimiting import competition thereby limiting choiceThere is currently an equilibrium between local supply and import which is good for competition.

– Local is not forced to become “GLOBALLY COMPETITIVE”

• Implications of local industry tariff increase application on imports

– The impact of this application (if approved) will have a limiting effect on total imports

– Imports from non-EU countries will be effectively stopped

– There will be an element of diversion of imports to the EU. (at slightly higher prices)

• Part 2

• Status of Poultry Tariffs in SA• Implications to Local Industry• Implications to Consumers

• If no change in duties

• If SAPA are granted their wish

• Status of Poultry Tariffs in SA– We believe that ITAC made a decision at meeting on

09 July 2013– We expect that this decision has been forwarded to

the Minister DTI– We are surprised that this “rushed job” has not been

finalised after two months– Importers are living “week to week” waiting for tariff

announcement

– Speculation is now causing real market disturbance

• Current Currency– Depreciation of Rand has already provided a 25%

protection since the investigation period

• If no change in duties:– SAPA will:• be forced to become globally competitive• have to relook their flawed business model• have to “balance” the carcasse• have to look at exports

• The consumer will be in the best position for both: - price and

- choice

If SAPA are granted their wish

• Access to food will be limited

• Affordability of Food will be negatively affected

• Quality levels will reduce

• Choice will be limited

• Jobs will be negatively affected

• Global competitiveness will not be necessary

• Consumers will pay for a poor business model• In the event of a disease outbreak the SA food

security will be threatened!!

• Implications of local industry tariff increase application on imports

– The impact of this application (if approved) will have a limiting effect on total imports

– Imports from non-EU countries will be effectively stopped

– There will be an element of diversion of imports to the EU. (at slightly higher prices)

• The net effect will be rising food prices, limited choice and lessened food security

Part 3 Building a globally competitive industry

• Solutions• Way forward– Mediation (between all affected parties)– CIDP (AMIE has a role to play)– Inter Departmental discussion (PC DTI/DED/DAFF)– Market Enquiry (Comp Comm mandate)

• Will result in a comprehensive value chain evaluation from genetic, feed, medicines, brining, distribution, marketing, and management and ownership, including imports’ role in this complex industry

– DAFF finalising and enforcing the “new” brining limits (max 4%) (supported by AMIE)

• Thank you