The new AGOA chicken rebate guidelines were gazetted on 1 March 2019. Whereas more clarity has been provided on how the whole rebate works, it’s vital to understand how the quota is allocated to each applying importer.
The starting point for the allocation is the split between Historical Importers (HI’s) and Historically Disadvantaged Individuals (HDI’s).
HI’s are established importers that have been operating in the market prior to the inception of the AGOA rebate. These typically have an import history of many years. This group is allocated 50% of the quota.
HDI’s are black owned import businesses. Prior to the inception of the AGOA rebate permit there was essentially no black owned chicken import businesses. One of the objectives of the AGOA rebate permit is to transform the industry by availing half the quota to black owned entrepreneurs. The remaining 50% of the quota is allocated to this group.
Once the split between the two groups has been done, the share for each company is then calculated on the following basis depending on the group the applicant falls within.
- BEE status: An HI can score either 70 points or 30 points on this aspect depending on the BEE contribution level. Those with a BEE level of 1 – 4, score 70 points while those with a level of 4 – 8, score 30 points.
Initially there was a third category where HI’s who could not produce a BEE rating certificate could score 10 points, however, this reward of non compliant businesses was abandoned. During the time of allocating 10 points to non-compliant HI’s, the scores were 60 points (level 1 – 4), 30 points (level 5 – 8), 10 points (non-compliant). BEE compliant HI’s, with a rating of 1 – 4, were further rewarded with an additional 10 points when the non-compliant category was abandoned, moving the points to 70 mentioned above.
- Previous import history: HI’s have been importing for a considerable number of years. In determining the quota allocation DAFF looks at the average bone-in chicken that a specific company has imported in the last three years. Here DAFF doesn’t only look at imports under the rebate permit but all the bone-in chicken imported from all countries.
The above aspects weigh equally and heavily in calculating the final score. Quantities finally allocated to each company are also influenced by the number of applicants and quantities applied for. The more qualifying applicants within the specific quota period the less is allocated to each applicant.
Historically Disadvantaged Individuals
HDI’s fall into two categories:
- New HDI’s – DAFF consider these to be those who are applying for the very first time but also includes those who have been applying in the last two years. Out of the total share allocated to HDI’s, new HDI’s have a 40% share.
- Established HDI’s – these are those who have been applying for the quota since its inception in 2015. Out of the total share allocated to HDI’s these are allocated 60%.
Since all HDI’s are already BEE compliant, the specific amount of quota each HDI eventually get is considerably influenced by the import history they have, number of companies that have applied and quantities applied for.
The more qualifying applicants within the specific quota period, the less quota is allocated to each company. This is a significant problem for HDI’s as the quota has generally tended to become smaller per company in the last two years. DAFF, DTI and ITAC are already engaging on how to eliminate this challenge. It’s likely that there will be further requirements or conditions which will eliminate a number of HDI’s currently qualifying to make the quota more sustainable and ensure sustainable businesses benefit.
Automated allocation of quota
The points scored on the above aspects are then fed into a software program utilised by DAFF to generate the actual quantities allocated to each company.