Far-reaching consequences of decreased protein imports
As an end-user, the South African consumer is increasingly feeling the strain of all industries, including the meat import and export industry. This is what the latest SARS trade statistics ending December 2022 reflect.
The popular narrative in the past number of years on especially poultry imports has been unfounded in most cases with major conjecture playing on the emotions of poorly educated consumers. But, numbers don’t lie. AMIE conducted a 5-year review of meat imports and can see a steady decline:
Since 2018 total meat imports have decreased by 36%, with the different protein categories decreasing as follows:
- Pork 29%
- Beef: 50%
- Lamb: 74%
- Chicken (excluding MDM): 56%
These figures don’t only tell the story of an industry under pressure but paint a very clear picture of the South African Consumer that is under increased pressure as protein food sources are becoming more expensive.
As a result of the raising prices, we can see a change in consumer behavior with the customers moving more towards the lower value proteins such as chicken offal and manufactured products. The import statistics of these proteins look like this:
- Chicken offal’s year-on-year (21/22) : 14% increase
- MDM used in the manufacturing process: 23% increase in 2022 compared with 2018 figures.
The South-African meat importers are continually battling several challenges. The major challenge at the moment is the current electricity crisis (load-shedding) impacting the whole value chain from production, input supplies, and retail. All these links in the chain add higher costs which impact the final product that consumers have to buy. On the other side, meat importers are fighting a range of additional issues like market access and trade tariffs.
Animal disease outbreaks of the Highly Pathogenic Avian Influenza (HPAI) have occurred in EU countries and several States in the US. Wednesday last week, Argentina and Uruguay each declared national sanitary emergencies after officials confirmed the countries’ first infections. Argentina found the virus in wild birds, while dead swans in Uruguay tested positive.
These outbreaks result in import bans that are slow and bureaucratic to resolve once a country has been deemed safe again. This has a knock-on effect of a shrinking number of countries that can supply much-needed affordable and high-quality poultry to South Africa to ensure food security and balanced nutrition.
With its high import duties, it is clear that importers are unable to bring in the favored ‘brown chicken meat’ at a competitive price. (Latest SARS statistics show imports of bone-in and boneless chicken cuts decreased by 68% and 90% since 2018. With a year-on-year decrease of 32% on bone-in chicken for 21/22). Import tax, local producers’ protectionist view, export barriers, and load-shedding are adding to the growing risk to food security in South Africa.
Might unnecessarily high import duties and trade barriers on poultry imposed by SA be affecting other industries?
The Citrus Growers Association of South Africa (CGA) have come out last week in the media urging President Ramaphosa to intervene in the ongoing EU orange export battle.
In the article CGA CEO Justin Chadwick says that the CGA believes that a panel is the only option to put a stop to the unjustified and discriminatory regulation, which threatens the survival of citrus growers and the tens of thousands of jobs they sustain. He added that there had been several engagements between government officials and their EU counterparts over the past few weeks, and the matter had received attention at the ministerial and presidential levels. However, despite ample evidence showing the new regulation was contrary to scientific evidence, unnecessarily trade restrictive, and allegedly in contravention of requirements for phytosanitary trade regulations, the EU had refused to make any concessions ahead of the 2023 export season, which starts in March. (Read the full article here)
Meanwhile, in Davos 2023 there are calls for collaboration, and papers presented on innovation for agriculture and the potential of Africa to feed the world. The current truth in South Africa is far more pessimistic. It is time that cross-industry collaboration to design solutions. How do we work together to establish a sustainable industry, develop our adjacent industries, and ensure a healthy import- and export balance that would not only benefit our producers, traders, and the economy but, most of all our consumers? A protectionist trade policy only hurts the economy and consumer, leaving a series of hamstrung industries buckling under post-Covid legacy matters, socio-political realities, and the ever-present electricity crisis. It is time for a new direction.
BY AMIE CEO: Paul Matthew
21 February 2023