AMIE Presentation Portfolio Committee of Agriculture Cape Town 10 September 2013

Part 1 What is the status Quo – Impact of current tariffs on competition and competitiveness – Implications of local industry tariff increase application on imports Part 2 Status of Poultry tariffs and Implications to local industry and consumers Part 3 Way Forward

Part 1 Status Quo – Five tariff Headings CurrentRequestedReq Rands/kg CCS27%82%R W/Birds27%82%R B/less5 %82%R Offal27%82%R B/inR 2.20 /kg 82%R 6.53

– Quality (SPS Measures) (SPS - Sanitary and Phyto Sanitary) Disease and bacteriological (imports top quality) The import regime is extremely strict and honerous – Volume of imports Relation to consumption Relation to brining – Serial offenders Comp Comm, Labelling, Brining, APS dispensations

Water sold as chicken every year twice the volume of imports!! Imported Volume compared to Brining AMIE Calculation of Waterless chicken SAPA Quoted at SANCU AGM Mt Local Production Total local Production Water added (&sold as chicken) =33% injection Total imports <10% of consumption Water as Percentage of imports226.05%

Jobs – Local Jobs direct5,000 – Indirect (making consumer ready) 10,000 These are real jobs which do exist Other Agricultural Exports (retaliation) -Citrus Black Spot (EU) -Canned Fruit (Aus)

Addicted to Protection History of protection 1997-current – 1997B/In R 2.20 (2 years) – 2001 USA Dumping – 2004Duty Increase – 2006USA Dumping Sunset Review – Brining (hugely profitable) – 2011USA Dumping Sunset review (faulty ITAC) – 2012 Brazil Dumping application (PC DTI concerns) – 2013Duty review (non EU) – 2013*DD EU (Holland and others) – 2013SPS request to DAFF (Underhand)

Impact of current tariffs on competition and competitiveness The large producers are squeezing out all competition (local and imported) Local competitors are limited in access to Genetic material, Feed, Distribution channels etc Limiting import competition thereby limiting choice There is currently an equilibrium between local supply and import which is good for competition. – Local is not forced to become “GLOBALLY COMPETITIVE”

Implications of local industry tariff increase application on imports – The impact of this application (if approved) will have a limiting effect on total imports – Imports from non-EU countries will be effectively stopped – There will be an element of diversion of imports to the EU. (at slightly higher prices)

Part 2 Status of Poultry Tariffs in SA Implications to Local Industry Implications to Consumers If no change in duties If SAPA are granted their wish

Status of Poultry Tariffs in SA – We believe that ITAC made a decision at meeting on 09 July 2013 – We expect that this decision has been forwarded to the Minister DTI – We are surprised that this “rushed job” has not been finalised after two months – Importers are living “week to week” waiting for tariff announcement – Speculation is now causing real market disturbance

Current Currency – Depreciation of Rand has already provided a 25% protection since the investigation period

If no change in duties: – SAPA will: be forced to become globally competitive have to relook their flawed business model have to “balance” the carcasse have to look at exports The consumer will be in the best position for both: - price and - choice

If SAPA are granted their wish Access to food will be limited Affordability of Food will be negatively affected Quality levels will reduce Choice will be limited Jobs will be negatively affected Global competitiveness will not be necessary Consumers will pay for a poor business model In the event of a disease outbreak the SA food security will be threatened!!

Implications of local industry tariff increase application on imports – The impact of this application (if approved) will have a limiting effect on total imports – Imports from non-EU countries will be effectively stopped – There will be an element of diversion of imports to the EU. (at slightly higher prices)

The net effect will be rising food prices, limited choice and lessened food security

Part 3 Building a globally competitive industry Access Export MarketsManage Input Costs Balancing the carcassGrow bigger birds Globally Competitive Industry

Solutions Way forward – Mediation (between all affected parties) – CIDP (AMIE has a role to play) – Inter Departmental discussion (PC DTI/DED/DAFF) – Market Enquiry (Comp Comm mandate) Will result in a comprehensive value chain evaluation from genetic, feed, medicines, brining, distribution, marketing, and management and ownership, including imports’ role in this complex industry – DAFF finalising and enforcing the “new” brining limits (max 4%) (supported by AMIE)

Thank you