The Red Meat Producers Organisation (RPO) is advocating for the inclusion of certain meat products in South Africa’s zero Value Added Tax (VAT) list.This call comes on the heels of the South African Poultry Association (SAPA) and the Democratic Alliance (DA) lobbying for zero VAT on individually quick frozen (IQF) chicken portions. President Cyril Ramaphosa’s recent announcement of a review of VAT-exempt food items to lower prices for low-income households further ignited the debate.
RPO CEO, Dr Frikkie Maré, emphasizes the importance of addressing both affordability and nutritional value when considering zero VAT on food products. While acknowledging the current list’s inclusion of essential food groups, he questions its comprehensiveness in tackling hunger and malnutrition. A comparison of IQF chicken with other meat products revealed that its price competitiveness is misleading when accounting for factors like brine and bone content. This led the RPO to advocate for the inclusion of affordable meat products such as tripe, trotters, and red offal in the zero VAT list.
A market analysis commissioned by the Red Meat Research and Development SA highlighted the potential distortions in the meat industry resulting from zero VAT on specific meat types.
An exclusive zero VAT rating on chicken could stimulate demand, potentially benefiting consumers but also leading to increased imports and harm to the local poultry industry. Furthermore, the long-term impact on consumer behavior is uncertain, as lower chicken prices could lead to increased consumption and subsequent price adjustments.
The RPO warns of negative spillover effects on the red meat industry, which has already faced challenges. A zero VAT rating on chicken could divert demand away from other meat products, exacerbating the difficulties faced by red meat producers. To mitigate these risks, the RPO suggests including various meat types in the zero VAT list to maintain relative price stability.The organization also raises concerns about the current ad valorem import tariff on poultry and red meat. If meat is considered a basic food item, protectionist measures might become less justifiable. Maré proposes a working group comprising government representatives, nutritionists, economists, and agriculturalists to assess the costs and benefits of including different meat products in the zero VAT list. This approach aims to maximize benefits for consumers while minimizing risks to the livestock and meat industry.
Professor Maxwell Mudhara, an agricultural economist, highlights the protein value of both poultry and beef while acknowledging alternative protein sources like plant-based options and fish. He favors poultry over beef due to climate change concerns and potential health implications associated with beef consumption.
