Saudi Arabia raises Poultry Import Tax

By Alexandre Rocha – Brazil-Arab News Agency

flag-pins-brazil-saudi-arabiaSao Paulo – Saudi Arabia has raised from 5% to 20% the poultry import tax, has reported the Brazilian Animal Protein Association (ABPA) this Friday (6). The country is the largest market for Brazilian poultry abroad.

According to ABPA’s manager of market access, José Pimenta, the tax rate returned to 2008 levels, when it had been reduced to 5%. That year, there was a strong hike in the international prices of food and importing-dependent countries faced times of crisis.

Saudi Arabia imports 57% of the poultry it consumes and Brazil holds an 88% share of these imports. In this sense, Pimenta expects the impacts of the tax hike on Brazilian exports to be “marginal”, given the strong presence of the Brazilian product in the market, production size and the great capacity by the country to supply halal meat, which is prepared according to Muslim traditions. “We don’t see [the possibility] a significant reduction,” said the manager.

The Arab nation has been developing local poultry production and there’s an interest by the Saudi poultry sector in a hike of the product’s import tax. According to Pimenta, from 2015 to 2016 the country’s output increased 3%, while total imports dropped 2%.

From a legal viewpoint, there’s not much to do, since the 20% rate is the cap for the product set by Saudi Arabia at

the World Trade Organization (WTO), that is, the country has the right to raise the import tax up to this level.

“Could [Saudi Arabia] reduce [the import tax] in the future? It could,” said Pimenta. “It’s [the market] very dependent of imports to domestic consumption,” he added.

This Friday, the day that the tax hike was announced, BRF common stocks had the sharpest decline at the Sao Paulo Stock Exchange (Bovespa). The papers went down 5.11% over the previous day to BRL 46.05. The holding, owner of brands Sadia and Perdigao, is the market leader in Saudi Arabia and this week had announced the start of operations of its subsidiary, OneFoods, headquartered in Dubai, and founded to focus exclusively on Muslim countries.

Poultry exports from Brazil to Saudi Arabia totaled USD 1.16 billion last year, a decline of 14.6% in comparison to 2015, according to data from the Ministry of Industry, Trade and Services (MDIC).

Also this week, Saudi Arabia banned imports of poultry, eggs and products from some provinces in Hungary, Ukraine, Poland, Holland and France, and from India as a whole. The action was taken due to the emergence of bird flu hotspots in these countries.

*Translated by Sérgio Kakitani

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