25 June 2020
The coronavirus has impacted agriculture and food production around the world. It is also exposing South Africa to an accelerated food-security threat,which requires action now from multiple players, from government to all involved in the food supply chain.
The threat is to South Africa’s beleaguered chicken industry and most likely to others such as the dairy industry, which have been hard hit by dumped imports. It is also a warning to other industries vulnerable to dumping, such as steel, textile and cement.
Trade predators will exploit the recovery in demand as lockdowns ease and food supply chains are repaired. They will pounce on vulnerable industries such as the chicken industry and flood the country with massive volumes of dumped product, putting local producers and thousands of jobs at risk, and endangering South Africa’s food security. It will be their opportunity to gain market share in order to take out the local producers.
As always, consumers will lose out because cheap imports provide profits for importers and middlemen, and the benefits are not passed on to the public.
The predators will use a mountain of frozen chicken, which has built up in Europe, Brazil and other major chicken-producing areas. Demand was curtailed by lockdowns, but production continued largely unabated. European Union chicken producers have even called for a halt to imports into the region because their freezers are overflowing.
That stockpile will be unleashed on South Africa and probably other vulnerable countries in Africa and the Caribbean where local industries have previously been devastated by huge volumes of dumped EU and Brazilian chicken. The coronavirus stockpile enables them to export with added vigour. The trade predators, in the EU, Brazil and elsewhere, will become super predators, seeking to dominate chicken sales at the expense of local industries and local jobs. And once they dominate local markets, they have pricing power and can keep on raising prices. We believe that this is a scenario facing many agricultural commodities in South Africa and Africa.
Now more than ever, it is time to safeguard our agriculture sector and to safeguard the public against predatory trade. The disruption in trade as a result of Covid-19 impact on production and supply chains signals a disruption in the status quo.
Predatory trade such as dumping, and unfair trade barrier such as the unfair application of sanitary and phytosanitary (SPS) requirements, favours the dominant producers who are heavily subsidised by their governments.
Abuse of dominance behaviour is set to get worse. Dominant producers with huge stockpiles will sell frozen chicken and other commodities at any price to grab market share and cripple local producers, and then recoup losses in the longer term once they have captured the new markets.
We are in the lull before the storm – we need to anticipate the attack that we know is coming and act expeditiously to head it off. We know that those who dumped previously are likely to be the worst of the new dumpers because predatory trade is an abuse of dominance and those who were dominant in the past are now in an even better position to prey on our local producers.
If we do not act now we will pay a heavy price for it. Jobs will be lost, businesses will go bankrupt, we will become food insecure and left to the vagaries of an international price for food denominated in US dollars against a weak rand. More people will go hungry and child stunting will increase dramatically – that is how we stand to lose our future.
Source: Independent Online