Summary
The introduction of Avian Influenza (AI) based restriction on imports from the EU has reversed the expansion of imports of EU poultry meat to South Africa which has been underway since 2010. However with local AI outbreaks depressing South Africa’s own poultry meat production imports increased from Brazil and the USA. SAPA continues to argue a major reduction in import volumes is needed if the South African poultry sector is to fulfil its potential as a creator of jobs and promoter of rural development. South Africa continues to call for an international initiative to address the problem of surplus ‘dark meat’. However the EU is unlikely to respond favourably to such suggestions given the potential threat to the EU poultry sector posed by Brexit related trade disruptions. Indeed under a ‘no-deal’ Brexit scenario the pressure to find new export markets for both EU27 and UK poultry meat is likely to increase.
The Impact in 2017
In December 2016 South Africa introduced avian influenza related restrictions on imports from 7 of the 10 EU member states then exporting poultry meat to South Africa. According to the South African Poultry Association (SAPA), the introduction of these import restrictions caused Dutch, German, Polish, Hungarian and UK exports to South Africa to fall dramatically for most of 2017. Meanwhile, in the first half of 2017 ‘Belgium and Ireland increased exports to South Africa, in the absence of other EU nations’, accounting for 8.2 % and 4.6 % respectively of total South African imports (1).
In the course of the whole of 2017 Danish poultry meat exports to South Africa more than doubled compared to 2016, coming to account for 3.5% of total South African imports. In addition over the course of 2017 a number of other previously high volume exporters were able to periodically re-enter the export trade, with Spain accounting for 1.6% of South African imports, while Hungary, the UK and the Netherlands collectively accounted for 0.7% of South African poultry meat imports.
The Impact of AI Outbreaks on EU Poultry Meat Exports to South Africa 2016-17 by Member State
| 2016 | 2017 | % change 2016-17 | |
| EU | 272,756 | 77,235 | -72% |
| – Belgium | 26,692 | 21,527 | -19.4% |
| – Denmark | 9,268 | 19,235 | +107.5% |
| – France | – | – | – |
| – Germany | 3,945 | – | -100% |
| – Hungary | 2,726 | 50 | -98.2% |
| – Ireland | 18,406 | 23,674 | +28.6% |
| – Netherlands | 111,919 | 2,143 | -98.1% |
| – Poland | 4,944 | – | -100% |
| – Spain | 41,074 | 8,730 | -78.7% |
| – UK | 43,782 | 1,876 | -93.7% |
Source: EC Market Access Data Base,
http://madb.europa.eu/madb/statistical_form.htm
SAPA has observed how ‘it seems that Belgian imports increase when other EU countries are affected by AI-related trade bans and decrease once these bans are lifted’ (1). This implies that imports from Belgium may not consist of poultry meat produced in Belgium. However the experience in 2017 does not entirely bear this out, with total Eurostat recorded Belgian poultry meat exports down 19.4% compared to 2016 level.
In light of the restrictions on imports from the EU in 2017 Brazil emerged as the main country of origin of poultry meat imports into South Africa, exporting 337,476 tonnes some 44.4% higher than 2016 (2), while the EU’s share of total imports fell from 49.7% in 2016 to 14.6% in 2017.
Impact of AI Bans on EU Broiler Meat Exports to South Africa (Tonnes) [1]
| 2013 | 2014 | 2015 | 2016 | 2017 | |
| Total South African | 354,266 | 368,202 | 456,954 | 528,108 | 523,428 |
| EU | 148,104 | 188,079 | 194,685 | 262,352 | 76,422 |
| Brazil | 169,032 | 154,280 | 225,850 | 218,036 | 320,885 |
| % share EU | 41.8% | 51.1% | 42.6% | 49.7% | 14.6% |
| % share Brazil | 47.7% | 41.9% | 49.4% | 41.3% | 61.3% |
Source: SAPA, ‘State of the Poultry Industry’, 13 February 2018 – Point of entry for SAPA power point presentation
https://pmg.org.za/committee-meeting/25773/
The second largest exporter of poultry meat to South Africa in 2017 was the USA. This followed the granting of a 65,000 tonne duty free quota (from April to March) as part of a compromise which retained South Africa’s eligibility for access to the US market under the US AGOA scheme. In 2017 imports from the US reportedly exceeded this quota with some 787,059 tonnes being imported throughout 2017 (3).
Over the course of 2017 overall South African poultry meat imports were down 0.6% on 2016 levels.
The Impact in 2018
The impact of the AI based import bans continued to be felt into 2018, with the EU accounting for only 10.2% of South African imports in the first half of 2018. In the first half of 2018 Ireland and Denmark were the main EU source of imports with 5.1% and 5% of total South African imports respectively. However in the first six months of 2018 there were only very small intermittent volumes being exported from the Netherlands, the UK and Germany and minimal imports from Belgium and no imports from Spain and Poland (2).
However according to SAPA by mid-2018, ‘most European HPAI events are now considered resolved (QIE) although the UK, the Netherlands, Germany, Denmark and Ireland have all reported cases in wild birds in 2018’ with Germany and the Netherlands also reporting cases in backyard poultry (2).
This is potentially significant since after the previous AI outbreaks in Europe in 2015, EU exports to South Africa recovered rapidly, reaching levels exceeding previous export levels once the AI restrictions were lifted (2).
However according to EU figure from January to July 2018 EU exports of poultry meat to South Africa were down 34% compared to the corresponding period in 2017, an export volume which was itself considerably down on export levels in 2016. From January to July 2018 the South African market accounted for only 3.6% of total extra-EU poultry meat exports (4). It is currently unclear whether EU export volumes have subsequently shown any recovery.
South African poultry imports 1H 2018 (tonnes) (3)
| Exporter | Tonnage | % South African Imports |
| TOTAL | 271,816 | |
| Brazil | 171,473 | 63.1% |
| USA | 45,631 | 16.8% |
| EU (Ireland – 5.1%, Denmark – 5%) | 27,725 | 10.2% |
| Argentina | 17,368 | 6.4% |
| Thailand | 3,899 | 1.4% |
| Canada | 3,297 | 1.2% |
As a consequence in 2018 Brazil continued to maintain its dominant position as a source of imports, followed by the US which exported a reported 45,631 tonnes in the first half of 2018. Nevertheless South African import volumes in the first half of 2018 were down 0.7% on the same period in 2017 (2). They were however still 25% above the 5 year average, indicating the constant growth in imports which had been underway over this period (1).
The On-Going Debate
The EU Delegation in South Africa seized on the increase in imports of poultry meat from Brazil and the USA to argue the EU was not to blame for the difficulties faced in the South African poultry sector. A March 2018 EU Delegation information note highlighted how in 2017 imports into South Africa from non-EU countries ‘stood at 175,950 tonnes having almost quadrupled from the 45,200 tonnes imported into South Africa in 2016’ (5). It was argued that in the absence of the EU from the market, South African importers simply sourced their poultry meat from other countries (5). However this neglects the impact of South Africa’s own avian influenza outbreaks which saw a mortality rate of broilers in the Western Cape (the largest poultry production zone in South Africa), of over 60% at the height of the outbreak.
AI Status EU Exporters Mid-2018 (2)
| The Netherlands The latest outbreak of AI was reported on 12 March with a report submitted to the OIE declaring the outbreak resolved on 10 July 2018. Exports of poultry meat to South Africa resumed in March 2018 with exports also taking place in April, before a suspension of exports pending final confirmation of the elimination of AI (total imports 1H 2018 159 tonnes) |
| The UK Outbreaks of AI in the UK ceased at the end of March 2018, with the AI outbreak being declared resolve din submission to the OIE on 5 April 2018. However on 15 June new outbreaks in northern Ireland were reported. Exports of poultry meat to South Africa resumed in March 2018, but with tonnages low and sparodic (total imports 1H 2018 125 tonnes) |
| Germany The last reported outbreak of AI in Germany was on 5th April 2018, with a report submitted to the OIE declaring the outbreak resolved on 1 June 2018. Exports of poultry meat to South Africa totalled 113 tonnes in 1H 2018. |
| Ireland The last reported AI outbreak in Ireland was in march 2018, with this outbreak not yet having been resolved. However in the first half of 2018 Ireland was still able to export 13,892 tonnes of poultry meat to South Africa, some 24.8% higher than in the same period in 2017 |
| France While the last AI outbreak in France was reported resolved on 18 October 2017, total imports of poultry meat into South Africa in 2018 were only 3.2 tonnes. |
| Denmark The last reported AI outbreak was on 15 April 2018, with a final report submitted to the OIE on 22 June 2018. Danish exports of poultry meat to South Africa in 1H 2018 totalled 11,517 tonnes, almost three times larger than in the same period in 2017.free status in February 2017 |
| Spain The last reported AI outbreak in Spain was 18 February 2017, with a final report submitted to OIE on 30 May 2017, with Spain reclaiming its HPAI free status on 2 June 2017. Although Spain exported 11,138 tonnes of poultry meat to South Africa in 2017, no exports h-took place in 1H 2018 |
| Belgium The last reported AI case in Belgium was on 7 July 2017 with a final report submitted to the OIE on 24 July 2017. While Belgium exported 23,451 tonnes of poultry meat to South Africa in 2017 in 1H 2018 only 23 tonnes have been exported |
| Poland Imports from Poland into South African have been banned since February 2017. While the last reported AI outbreak in Poland was recorded on 15 March 2017 and Poland submitted a report to the OIE on 20 April anomalies in Polish reporting have seen the ban on imports from Poland remain in place. |
This domestic production situation is now changing. Data from SAPA for the first quarter of 2018 showed total broiler meat production in the first quarter of 2018 was 8.3% higher than the first quarter of 2017 and 1.2 % higher than the last quarter of 2017 (3). This suggests a substantial recovery in South African poultry meat production is underway. Nevertheless SAPA expects that companies affected by the AI outbreak would only ‘be at full capacity around June 2019’ (6).
In a presentation on the state of the poultry industry in February 2018, Dr Charlotte Nkuna, Interim SAPA CEO highlighted how in terms of the future of the South African poultry industry ‘imports had to be reduced by at least half to ensure the industry’s survival, reinvestment and growth’. This would take total import levels back to the level of 2010, before the full completion of tariff reductions on imports from the EU under the EU-South Africa trade agreement and hence before the surge in imports from the EU. It was argued there is a need ‘to create a framework that made exporters produce products for South Africa, and not simply dispose of stored waste’ (6).
| Comment and Analysis Overall the experience in 2017 suggests the only way for South Africa to curb the expansion of poultry mean imports from the EU is through the application of import restrictions, in this case Avian Influenza induced bans on imports on SPS grounds. This can be seen as a form of quantitative restriction, though be it one which is technically WTO legal if not directly linked to the animal health situation in the exporting country.The EU Delegation figures from March 2018 implied a 130,750 tonne increase in imports from non-EU sources. If correct this would be substantially less than the decline in imports from the EU, which between 2016 and 2017 fell 195,521 tonnes.If true these figures would have created a net additional market space for South African poultry producers of 64,771 tonnes. However it is unclear how accurate the figures cited by the EU delegation are. Figures from SAPA drawn from its first quarter 2018 report suggest total South African poultry meat imports were down only 0.6% or 3,278 tonnes in 2017, with imports being down a further 0.7% in the first half of 2018 (3). It is nevertheless against this background that it was reported in September 2018 the Food and Allied Workers Union reported ‘that about 400 workers who had been retrenched have since been reinstated by RCL Foods, the holding company for Rainbow Chickens’ (7). However SAPA has made clear imports will have to be reduced ‘by at least half to ensure the industry’s sur, and rural development and transformation’ (6) were to be met. It is noteworthy the South African governments’ wider policy objectives in the poultry sector related to ‘food security; job creation; and rural development and transformation’ bear a close resemblance to EU agricultural policy objectives, which in the EU context, is held to justify the active use of non-tariff trade policy tools in the EU’s trade relations with its major agro-food sector competitors. The EU maintains high MFN tariffs in the poultry sector and makes extensive use of tariff rate quotas to manage imports, in the face of rising and evolving EU market demand for poultry meat and poultry meat products. The aim of this policy has been to preserve the market space for the further development of the EU’s own poultry sector. This managed import policy has proved highly effective, enabling EU poultry producers to capitalize on the growth in EU demand for poultry meat which has occurred over the past decade. Indeed, while between 2008 and 2017 the consumption of poultry meat in the EU increased 25%, domestic EU poultry production increased 30% over the same period (see companion epamonitoring.net article ‘What Do Current Investment Trends in the UK Poultry Sector Tell Us About the Impact of EU Poultry Sector Trade Policies?’, 11 October 2018). This successful expansion of EU poultry meat production has been achieved despite the high production costs of average EU poultry producers compared to other major poultry exporting nations. The key to this is the EU’s tightly managed poultry meat import regime with no less than 38 tariff rate quota’s (TRQs) being applied to poultry meat imports and virtually no imports of poultry meat taking place outside of these TRQ arrangements. This has created a situation where despite the 2,664,000 tonnes increase in EU consumption of poultry meat between 2008 and 2017, EU imports of poultry meat were actually 0.7% lower in 2017 than in 2008. EU poultry meat producers have recognised that in the absence of the currently tightly managed trade regime poultry production in the EU would rapidly be displaced from the general poultry meat market by far cheaper imports and domestic EU poultry meat producers would be relegated to the production of specialty poultry products. As EU poultry producer representatives acknowledged in a 2005 evaluation of the EU poultry regime ‘in the absence of import tariffs…the EU market would rapidly be influenced by imported products, with EU producers increasingly restricted to supplying niche markets’ (8). This is not the end of the story, for the EU’s import regime carries important consequences for EU exports of poultry meat. This arises from the distinct preference of EU consumers for breast meat. This has a created a situation where the expansion of EU poultry production promoted by the tightly controlled import regime has generated a rapid expansion of EU production of poultry parts, which are surplus to domestic EU requirements. It is these frozen poultry parts which have increasingly been exported to sub-Saharan African markets, with until 2017 the South African market being a major target market, as a result of the trade preferences granted EU poultry meat exporters under the EU-South Africa trade agreement (TDCA). In the light of the EU’s experience of ‘managed trade’ in the poultry meat sector, which has seen major growth in domestic production despite the lack of international price competitiveness of EU producers, the EC’s policy insistence on trade liberalisation in the poultry meat sector under trade agreements with African countries appears highly inconsistent. This is particularly the case in regard to the EC’s insistence on the abandonment of any use of quantitative restrictions on imports from the EU. Indeed, against the background of the EU’s own poultry sector experience one might have expected a more sympathetic response to the call from South Africa’s Trade and Industry Minister for an international initiative to address the structural surplus of ‘brown meat’ (9). While acknowledging the need to address domestic competitiveness issues Minister Davies has consistently argued that addressing competitiveness issues would be of little value on its own, if the structural problem of the surplus of brown meat on global markets were left unaddressed. Unfortunately given the fears for the EU poultry meat sector arising as a result of the Brexit process, there would appear to be little prospect of the EU reversing its current insistence on the removal of all non-tariff barriers to EU poultry meat exports. Indeed, pressure to ensure the opening up of new markets to EU poultry meat exports are likely to increase. One optimistic note from an African perspective however, is the rapid growth in EU poultry meat exports which is underway to Asian countries notable the Philippines and Vietnam. Between 2014 and 2017 EU exports to the Philippines and Vietnam increased 122.5% and 169.3% respectively, taking over an extra 104,000 tonnes of poultry meat exports, with this growth continuing into the January-July period in 2018 (+ 58% and +63% respectively) (4). In the coming years while this could offer some relief to hard pressed African poultry producers, the EU’s underlying lack of price competitiveness vis a vis US, Thai and Brazilian exporters could well see them squeezed out of these Asian markets. This could become particularly the case once the current SPS and food safety assurance problems in the Brazilian meat sector have been addressed. |
Source;
(1) South African Poultry Association, ‘South African poultry meat imports: Country report July 2017’,
https://www.sapoultry.co.za/pdf-statistics/country-report.pdf
(2) SAPA, ‘South African Poultry Meat Imports: Country Report June 2018,
https://www.sapoultry.co.za/pdf-statistics/country-report.pdf
(3) SAPA, ‘Key market signals in the Broiler Industry 1Q 2018
http://www.sapoultry.co.za/pdf-statistics/broiler-industry-key-market-signals.pdf
(4) EC, ‘EU Market Situation for Poultry Committee for the Common Organisation of the Agricultural Markets’, 20 September 2018
https://circabc.europa.eu/sd/a/cdd4ea97-73c6-4dce-9b01-ec4fdf4027f9/24.08.2017-Poultry.pptfinal.pdf
(5) European Union Delegations to South Africa, ‘Facts & Figures: EU poultry imported into South Africa’, 5 March 2018
https://eeas.europa.eu/sites/eeas/files/20180302_poultry_factsheet_1.pdf
(6) ‘Poultry Industry South African Poultry Association briefing; DAFF 2018/19 Annual Performance Plan; with Minister Agriculture, Forestry and Fisheries’, 13 February 2018
https://pmg.org.za/committee-meeting/25773/
(7) Fair Play Movement ‘400 jobs regained’, 4 September 2018
http://fairplaymovement.org/400-jobs-regained/
(8) Agra CEAS Consulting, Evaluation of the Common Market Organisation (CMOs) for Pigmeat, Poultrymeat and Eggs, Contract 30-CE-0009330/00-422134/CC/November 2005,
http://ec.europa.eu/agriculture/eval/reports/pig_poultry_egg/fullrep_en.pdf
(9) 702.co.za, ‘Minister Rob Davies in the UK to discuss Brexit and trade with SA’, 25 January 2017 9:36 AM
http://www.702.co.za/articles/240372/minister-rob-davies-in-the-uk-to-discuss-brexit-and-trade-with-sa
[1] South African import figures do not directly correspond with EU export figures, given cargoes exported at the end of the year from the EU arrive in South Africa in the next calendar year. In addition it should be noted the SAPA figure refer to Broiler meat only.