US poultry export deal will help small farmer sector

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The deal in the long-standing dispute of the export of bone-in chicken pieces from the US was struck recently in Paris. The US poultry industry, represented by the National Chicken Council and United States of America Poultry and Egg Export Council (USAPEEC), had demanded that the current anti-dumping duties that South Africa has in place be dropped from the tariff book so that the exports can resume.

Menaging negative impact on production and jobs

An agreement was reached on a quota of 65,000 tons per annum, as long as South Africa is part of AGOA.

Briefing the National Assembly on Wednesday, Trade and Industry Minister Rob Davies said negotiations to a final compromise had to find a balance in that they had to ensure that the poultry industry could manage any negative impact on production and jobs. This objective said the Minister, has been reached.

"Both the dti and Department of Agriculture, Forestry and Fisheries (DAFF) have built a strong relationship with the poultry sector to continue to work with them on the transformation of the sector and the development of the small farmer sector," explained the Minister.

He added that the US offered to provide development support for the small farmers through investment, skills development and support with processing. "This offer will need to be concretised with requests for scholarships on poultry production, investment, and transfer of processing technology."

He said the quota creates new opportunities for new and emerging importers of poultry to benefit from the deal. "DAFF and the dti will determine the manner and quantum that will be allocated to historically disadvantaged individuals," explained the Minister.

Extending AGOA

AGOA is a preferential agreement that has been in place since 2000 between the US and Sub-Saharan African countries. The current AGOA is due to expire at the end of September. The US Congress is discussing the extension of AGOA. So far, the Senate has agreed to extend AGOA for 10 years and it has also agreed to include South Africa.

In 2014, major AGOA-beneficiary sectors, amongst others, included vehicles, mineral and metals, chemicals, and agricultural products.

Automotive sector exports

Of the total South African exports to the US, 38% went under AGOA in 2014, down from 44% in 2013. The decline in AGOA exports may be attributed to the fact that Mercedes-Benz ceased exporting its C-Class vehicles from South Africa, as the company relocated its production of these models to the US in 2014.

However, the recent announcement by Mercedes that it intends to resume its exports of its C-Class vehicles to the US will expand the automobile exports of South Africa into the US market, especially if AGOA is secured for South Africa for another 10 years.

In the case of the auto sector, the main beneficiary is currently BMW. BMW currently exports 40% of its current production of 70,000 units (3-series sedan) to the US.

Metals and agriculture sector exports

In the metals sector, South Africa's manganese exporters to the US benefit significantly from AGOA and in chemicals, Sasol takes advantage of the preferences to export a number of its chemical products.

In agriculture, citrus exporters faced with challenges in the European Union market have been able to use AGOA benefits to expand their exports last year to 107,000 tons.

In addition, the total number of jobs estimated by one study to have been created by AGOA for South Africa was approximately 62,000.