The South African chicken industry, a significant portion of the country’s maize industry, and tens of thousands of jobs are under threat because huge quantities of surplus chicken are being dumped in this market by other countries at prices way below their cost of production.
The cause of the problem is that some foreign producers are selling cuts of brown meat that are unpopular in North America and Europe below cost in South Africa. The preference in North America and Europe is for chicken breasts and wings, and these premium cuts can be sold there at a price high enough to cover the production cost of the entire chicken. This leaves the brown meat – leg quarters of drumsticks and thighs – which becomes surplus offcuts which are classified as waste and then sold in any market that will take them for any price the exporters can get. They are sold below the cost of production, which is the trade definition of dumping and against the rules of the World Trade Organisation. As local producers cannot compete with dumped products at artificially low prices, they are left with no options other than to shut operations, cut jobs and eventually go out of business.