Abstract:
Following the application in March 2013 by the South African Poultry Association for
increased tariffs to insure the sustainability of South African broiler production, this paper
critically evaluates the effect of increased tariffs on broiler producers and chicken meat
consumers in South Africa. Arguing beyond the level of tariffs, it highlights some of the
deeper underlying drivers of competitiveness in the industry. From a self-sufficiency
perspective, the need to support broiler producers is clear, yet the cost to consumers as well as
the segment of the population that would have to bear the cost of higher tariffs is questioned.
The proposed tariffs, as well as two other possible scenarios are simulated within a partial
equilibrium framework in order to determine the effect on the fundamentals of the South
African broiler industry. Simulations highlight the difference in outcomes when imports
originating from the EU are also included in the general tariff increase. Under the basic
scenario that simulates the impact of the current tariff application by SAPA, consumer prices
for whole frozen chicken will increase by 2.6% while producers will enjoy an increase in
producer prices of approximately 5%. On average, local production will increase by 16 000
tons per annum in the long run. Although 5% is a significant margin on the bottom line for
broiler producers and a 2% increase in the average consumer price seems to be digestible, one
has to take a step back and ask the question why our chicken producers cannot compete
against imported chicken.