Building capacity to help Africa trade better

Anti-dumping duty on chicken from Brazil


Anti-dumping duty on chicken from Brazil

Are frozen whole chickens and boneless chicken cuts being dumped in the SACU market causing material injury to the domestic (SACU) industry? Willemien Viljoen, tralac Researcher, discusses anti-dumping duty on chicken from Brazil

On 24 June 2011 the International Trade Administration Commission (ITAC) of South Africa initiated an investigation into the alleged dumping of frozen whole chickens and boneless chicken cuts originating and/or imported from Brazil. The investigation was initiated subsequent to an application on behalf of the South African Poultry Association (SAPA) alleging that frozen whole chickens and boneless chicken cuts were being dumped in the Southern African Customs Union (SACU) market causing material injury to the domestic (SACU) industry. SAPA represents 80 percent of the domestic chicken industry in SACU and in this case represented domestic producers Rainbow Farms (Pty) Ltd., Earlybird (Pty) Ltd. and Country Fair Foods (Pty) Ltd. Based on the information received from the applicants, South African importers and Brazilian producers and exporters ITAC made the preliminary determination that dumping had taken place, causing harm to the SACU industry and requested the Commissioner for the South African Revenue Services (SARS) to impose provisional anti-dumping duties for the following 26 weeks until the preliminary investigation by ITAC has been finalised.

In order to be successful with an application for the imposition of an anti-dumping duty, the applicant must show: (a) dumping has taken place, (b) causing material injury to the domestic industry of the like product and (c) that there is a causal link between the alleged dumping and the material injury. According to the Commission’s preliminary determination the applicants provided sufficient information to establish prima facie proof of dumping, material injury and a causal link (the full report on the preliminary determination is available here). The Commission found that imports of whole chickens from Brazil increased from 36.3 percent in 2008 to 44.6 percent in 2010, while imports of boneless cuts decreased from 97.6 percent to 94.2 percent over the same time period.

In the preliminary investigation of the injury period the Commission found that domestic producers of whole chicken had experienced material injury based on price under cutting caused by the dumped imports, a decrease in market share by 40 percentage points and a decrease in growth. However, sales volume, sales value, profit, output, productivity, employment and wages increased during the investigation period. The finding of material injury, caused by Brazilian boneless chicken cut imports, were based on the domestic industry experiencing price under cutting and decreased market share (by 27 percentage points), growth, capacity utilisation, sales volume and output during the injury period. The Commission determined the dumping margin to be 62.93 percent in the case of whole chicken imports. The dumping margin for boneless cuts was found to be 6.53 percent in the case of imports from the importer Aurora and 46.59 percent from all other Brazilian importers.

Although SAPA is satisfied with the findings of the Commission, stating that Brazilian producers have contravened fair trading conditions, the Brazilian poultry association Ubabef has indicated that the anti-dumping case is purely political and that South Africa is protecting inefficient producers which will be to the detriment of consumers in SACU that would otherwise benefit from a cheaper protein supply. Their argument is that if Brazilian producers can produce chicken more efficiently, affordably and sustainably why should they not be allowed to feed starving people in Africa? The magnitude of the anti-dumping duties, between 6 percent and 63 percent, will lead to either the prevention of imports from Brazil or the cost of the anti-dumping duty being transferred to the consumer, in both cases contributing to increased food inflation. The General Manager of local importer Britos Foods also views the imposition of anti-dumping duties as ridiculous with ITAC being the rubber stamp of the poultry association. According to him anti-dumping duties should not be implemented because imported chicken constitutes less than 15 percent of the total consumption in South Africa and the biggest losers will be the domestic consumers who will be at the mercy of the domestic producers.

Ubabef has shown its dissatisfaction with the Commission’s decision by indicating that the association will be asking the Brazilian government to approach the World Trade Organisation (WTO) regarding the decision to impose anti-dumping duties. According to the association the findings of the Commission are fatally flawed: the findings contain various violations of the WTO rules on anti-dumping, there are various technical failures and also show a lack of consideration of the responses of the South African importers and information from Ubabef about how the costs of the Brazilian produces are calculated.



Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010