South Africa: Should VAT and duties on chicken meat be abolished?

Chicken is the most popular and most affordable source of MEAT protein in South Africa. The country's poultry industry is a strategic national industry and a R50 billion asset, directly or indirectly providing more than 100,000 jobs and vital to food security.  

The South African Informal Traders Alliance (SAITA), which claims to represent more than 2 million micro-enterprises, has asked the government to remove tariff taxes and VAT on chicken products. However, Isaac Breitenbach, HEAD of the South African Poultry Association's (SAPA) broiler organization, says consumers will ultimately lose out if duties on chicken imports are lifted.

As the price of poultry, an important source of food, continues to rise, SAITA said the removal of tariff taxes and VAT would provide relief to informal traders and consumers from low-income households.

The most common products sold by small shops are fruits and vegetables, chicken and eggs, dairy products, chips, sweets, soft drinks and tobacco products.

Rosheda Muller, National President of SAITA, commented that the cost of living in the country "seems to be rising to an unsustainable level" and noted that wages are not moving in the same direction. “Chicken is perhaps the most important part of our diet, and often the only meat that locals can afford,” she said, adding that prices for all the nutritious foods consumed in poorer communities are rising. 

“When food prices rise to this level, people go hungry and don’t get the nutrient rich foods they need to stay healthy,” the expert notes.

The proposal by Paul Matthew, CEO of the Association of Meat Importers and Exporters (AMIE), to suspend existing tariffs and not introduce new tariffs for the next 3 years is visually appealing but economically dangerous, said Isaac Breitenbach, head of the South African Poultry Association (SAPA).

He said it would benefit importers whose revenues and profits have been affected by the decline in imports over the past 3 years, but it would threaten the South African poultry industry.

According to him, this will not affect the main drivers of food price inflation - rising prices for feed, fuel and fertilizers. This came as prices were already rising due to the impact of the covid-19 pandemic on global trade and grain prices, which account for almost 70% of production costs for poultry producers.

Removing all tariffs and guaranteeing no new tariffs for 3 years will lead to a flood of dumped chicken imports, Breitenbach said, adding that small independent producers will feel the biggest impact.