The strange case of the shortage that wasn’t

The big mystery about South Africa’s rebates on chicken imports is why they were approved when they weren’t needed.

This question has been asked several times of the trade regulator, the International Trade Administration Commission (ITAC), which manages the rebates. It has not yet been satisfactorily answered.

The rebates were intended to encourage chicken imports if there is a shortage on the local market. Following a directive last year from trade minister Ebrahim Patel, ITAC issued guidelines this year which stated that rebates would be approved only if there was a shortage and then only if that shortage resulted from bird flu outbreaks.

These guidelines were gazetted on 29 January this year, by which time it was clear that bird flu had abated, that there had been no shortages in December or January, and that no shortage was anticipated in coming months. Measures taken by South African poultry producers, including importing millions of hatching eggs, had ensured that production levels were back to normal.

Yet, on 8 February, ITAC announced that rebates were being approved for the first three months of this year. This was based on its estimate on 15 December last year that there would be a shortage in 2024. To all questions about the shortage, ITAC refers back to this estimate.

It has issued rebate permits to importers that the guidelines specify would be valid “for the duration of the shortage” when there has been no shortage in January, February or March.

FairPlay’s latest questions to ITAC have not shed much light on the issue. ITAC insists that its investigation that determined that there would be a shortage was thorough and wide-ranging.

“The Commission employed a structured, holistic approach, considering a wide array of factors, including historical data, average production figure, and specific influences like the avian flu,” ITAC told us.

“This comprehensive perspective ensured that the estimation was detailed and well-rounded, taking into account both long-term trends and immediate impacts.”

ITAC has not explained why it apparently failed to take account of actual market conditions in January and February, when it was approving rebate permits based on a non-existent shortage.

The SA Poultry Association (SAPA) has taken the issue directly to Minister Patel and, after “fruitful” discussions, it is hoping for a different outcome when ITAC considers rebates for the three months from April to June this year. If there is no shortage, there should be no rebates.