China is the second largest broiler meat consumer in the world, according to a USDA Foreign Agricultural Service Global Agricultural Information Network (GAIN) report. Since January 2015, the United States has been restricted from the market due to highly pathogenic avian influenza (HPAI) outbreaks. As a result of the United State’s avian influenza restrictions, Brazil, Argentina, and Chile have all increased exports of broiler meat to China.
China’s imports increased by nearly 3 percent in calendar year 2015 to 268 thousand metric tons (TMT). During the first six months of 2016, China’s imports have increased by over a third in comparison with the same period in 2015. This sharp increase in the first half of 2016 is because of the inability of China to meet demand domestically. The GAIN report forecasts imports to increase over 200 TMT in calendar year 2017 to 480 TMT as a result of the decline in Chinese production.
Brazil is the top beneficiary from the absence of U.S. suppliers and has been able to increase broiler meat exports to China by more than 60 percent over the last two years. This is a result of many additional Brazilian factories being approved to export to China and the depreciation of the Real. Brazilin exports of broiler meat to China now account for approximately three quarters of total Chinese imports.
The Chinese poultry industry has grown over recent years, adding many new slaughtering facilities in the provinces of Shandong and Liaoning. However, because of a reduction in available birds, these facilities are not operating at full capacity. As the supply for broiler meat tightens, prices will increase and consumption will decrease. The GAIN report forecasts China’s 2017 broiler meat consumption to be 11.6 million metric tons, a 13-percent decrease from USDA’s official 2015 consumption number.
China has restricted all U.S.-origin poultry and poultry products since January 2015 in direct response to the December 2014 HPAI outbreaks in the United States. China has not removed restrictions on U.S. poultry even though the United States has been recognized by the World Organization for Animal Health (OIE) as free of HPAI since April 22, 2016. China requires countries to be free of both HPAI and low pathogenic avian influenza (LPAI) for 90 days before submitting an application to get the AI restriction lifted. OIE recommends countries to be free of only HPAI. Once a country is free of AI, China’s application process to lift restrictions is time consuming.
China also has anti-dumping duties on U.S. poultry and poultry products. The World Trade Organization found that China’s imposition of higher duties on chicken broiler products, is unjustified under international trade rules. The dispute settlement process in the WTO case is ongoing.
The full GAIN report can be viewed here.
