“That’s more challenging because we have a free trade agreement with Europe in terms of various chicken parts into South Africa duty free. I’m not quite sure how they plan to address that but it will be a different kind of case to the one we’ve just seen which is a more general tariff increase,” Peter Draper, a senior researcher at SAIIA, told CNBC Africa on Tuesday.
Trade and industry minister, Rob Davies has come to the rescue of South Africa’s poultry industry by significantly increasing the import tariffs on five categories of imported chickens.
“I think the minister has walked quite a fine line between balancing the consumer interests, particularly the interest of poor consumers, with a relatively small but powerful group of companies that have been suffering under very competitive conditions,” Draper explained.
The whole birds, which represent less than one per cent of imports in the past 12 months, have seen tariffs increased to 82 per cent.
“If you buy a whole bird, it’s probably going to double the price, possibly even more because Nandos is going to exacter markets on that but then again not all whole birds are imported. It will have some pricing effects for sure and those are targeted primarily at the richer consumers,” said Draper.
“If one takes the view that this is the first step in a broader initiative, then it’s good news. Basically it means a little bit more protection, I don’t think it’s a lot more protection at this stage anyway, and that means shoring up the domestic market to some extent – that means better profitability.”