Amid the crisis in South Africa’s poultry sector, observers have been questioning the extent to which the AGOA rebate has contributed to the predicament of the country’s chicken industry. Since the Paris Deal – concluded on 5th June 2015 – many well-placed fears seemed to suggest that removing an anti-dumping duty of R9.40/kg on 65 000 tons of bone-in chicken portions would pose a serious threat to the domestic industry, which had already endured several years of economic distress. But the promulgation of the AGOA rebate in December 2015 meant that bone-in chicken imports from the United States could commence as soon as January 2016. So, have bone-in chicken portions from the United States “flooded” the South African market?
In absolute terms, the data seems to suggest not. Between January and December 2016, South Africa imported 22 154 tons of bone-in chicken portions – which is roughly 34% of the 65 000 tons that were set aside under the AGOA rebate provision. Overall, the United States accounted for 9.3% of the 239 465 tons of bone-in chicken portions that South Africa imported in 2016 (see Chart 1). In absolute terms, the numbers evidently show that the United States had a small share of the South African market, and therefore, one would argue that bone-in chicken from the United States did not flood the market. However, some experts would tend to disagree with this viewpoint.
In relative terms, the data could be interpreted otherwise. A “back-of-the-envelope” calculation shows that South Africa’s imports of bone-in chicken increased by 24%, from 192 446 tons in 2015 to 239 465 tons in 2016 (see Chart 2). The fact that the 239 465 tons of bone-in chicken portion imports is a historic record, has led some analysts to believe that the entry of the United States could be seen to have flooded the market. The basis of this argument is drawn from the thinking that imports of bone-in chicken portions from the United States did not “substitute and replace”, but rather simply “added-on” to South Africa’s import volumes.
From 2015 to 2016, total bone-in chicken imports grew by 47 019 tons, and this increase from the United States contributed 22 154 tons to the overall growth. As imports from the United States increased in 2016, those from comparable competitors such as Brazil and Argentina declined by 7 793 tons and 6 748 tons, respectively. This suggests an element of a substitution effect in imports, where imports from the United States partially displaced those from Brazil and Argentina.
However, the overall picture of growth and losses in South Africa’s bone-in chicken imports “before” and “after” the AGOA rebate also present an interesting dynamic. Let’s consider 2015 as the base year for a “before the AGOA rebate” scenario. In 2015, overall bone-in-poultry imports increased by 35 435 tons, and in 2016 “after the AGOA rebate”, they increased by 61 560 tons – this shift suggests an additive effect to imports.
One could dispute this point on the basis that 2015 would not be an appropriate base year for a comparative analysis, because some bans in EU chicken occurred during the course of 2015. And yet more bans were also implemented on poultry imports from the EU in December 2016, making any assessment even more tenuous. But if, for argument’s sake, one considers a longer-term trend, then you might also come to a similar conclusion. The average growth in South Africa’s bone-in chicken portion imports in 2016 was 1% over and above the previous 5-year average (2011-2015) of 23%. In this sense, it is entirely plausible to argue that the additive effect is larger than the substitution effect – such that the net effect of the United States AGOA rebate has led to an increase in South Africa’s bone-in poultry imports.
In light of the above, one can appreciate the divergent views regarding the influence of the United States’ entry in the South African bone-in chicken market. Some will argue, from an “absolute” perspective, that the United States’ share of 9.3% in South Africa’s bone-in chicken imports does not amount to a “flooding” of the market. However, others may argue from a “relative” point of view, that the additive effects of the United States volumes may have, indeed, led to a flooding of the South African market. That said, whether bone-in portions of poultry imports from the United States “flooded” the market remains debatable, and depends on your point of departure from the two viewpoints outlined above.
 This increases include those from the European Union (EU), which accounted for 38 264 tons