China. Poultry and Products Annual. Sep 2013 Nov. 10, 2013
Post forecasts that China’s 2014 broiler production will increase by two percent to 13.7 million tons, due to an expected recovery from this year’s H7N9 outbreaks in China. Post estimates that China’s 2014 broiler consumption and imports will expand by four percent to 13.2 million tons and 270,000 tons, respectively. For the first half of 2013, sources report that the U.S. export price was reported at $1,729 per ton, which is 44 percent cheaper than its South American competitors. Despite these favorable prices, U.S. exports are challenged by China’s decision to reinstate a ban on Arkansas poultry and impose restrictions on Wisconsin poultry, due to low pathogenic detections in both states. Post forecasts that China’s 2014 exports will reach 410,000 tons, nearly a three percent increase from the current 2013 figure.
Production and Policies
Post estimates that China’s 2014 broiler meat production will reach 13.5 million tons, a two-percent increase over the updated 2013 figure. Sources note that production is recovering from the H7N9 bird flu outbreaks (during March-May 2013), which infected 135 humans with 44 mortalities and brought a loss of $9.68 billion (RMB60 billion) to the Chinese poultry industry. Despite confirmed H7N9 cases near Hebei in July and Guangzhou in August, domestic poultry consumption increased gradually in July. China, in partnership with the World Health Organization (WHO), identified the virus as a low pathogenic virus, which has helped consumers regain confidence in domestic poultry.
As of May 2013, China’s Ministry of Agriculture and Ministry of Finance started to provide a one-time subsidy of $8.00 (RMB50.0) per bird for grandparent-generation (GPG) for poultry breeds in production. Breeding poultry companies cannot reduce, suspend, or switch to other productions within six months after receiving the subsidy. Local governments are providing additional subsidies. For example, the Jilin provincial government reportedly provided $1.61 (RMB10.0) per bird for GPG breeding birds (in production) and $1.29 (RMB8.0) per bird for parent-generation (PG) breeding bird (in production).
Changes to 2013’s slaughter and production estimates:
Post lowered its slaughter estimate by 420 million birds to 10.1 billion and reduced its broiler meat production estimate by 550,000 tons to 13.5 million. Weak consumption and low broiler meat prices caused some farmers to cull birds earlier than expected to avoid potential outbreaks and to save feed costs. As a result, farmers reported lower-than-expected carcass weight.
Broiler meat prices are returning to normal levels. China’s average poultry retail price (between April and July 2013) decreased by 4.5 percent as compared to the same period in 2012. Prior to the H7N9 outbreaks, the average retail price was 4 percent higher than the previous year.
China’s broiler meat recovery is currently challenged by low broiler meat prices and high feed prices. China’s Ministry of Agriculture reports that China’s average broiler feed price (during January-June 2013) increased by six percent as compared to the same period last year.
Post estimates that China’s 2014 broiler meat consumption will increase by three percent to 13.6 million tons based on projected market recovery.
Change in 2013’s consumption estimate:
Post’s consumption estimate is revised downward by 655,000 tons to 13.2 million tons, due to changes in consumer demand for poultry products. Estimates for China’s total and per capita consumption are expected to be the lowest in the last three years. Several food safety and public health incidents impacted this year’s poultry consumption:
• The H7N9 outbreaks caused many restaurants and school canteens to change their menus that included poultry products. Many households in affected areas also cease from cooking poultry products.
• Negative media reports also surfaced about a well-known Shandong broiler company, Liuhe Co., which allegedly provided broiler materials containing harmful chemical residues to foreign fast food chain restaurants and local supermarkets.
• China’s economic slowdown and increases in labor costs resulted in the shutdown of labor-concentrated factories in the Pearl River Delta. Rural migrant workers, who worked in that area, largely consumed broiler meats because of its cheap price, but low employment has resulted in fewer purchases of broiler meats.
Post forecasts that China’s 2014 broiler imports will reach 270,000 tons, a four percent increase from its updated 2013 estimate. 99,338 , 40%123,048 , 49%13,131 , 5%7,361 , 3%7,655 , 3%China Broiler Meat Import SharesJanuary-July 2013 (MT)U.S.BrazilArgentinaChileOther
Post’s 2014 import estimate is expected to be the highest over the past four years; however, this is far below the record high import level of 480,000 tons in 2007 before China imposed the antidumping and countervailing duties on U.S. poultry and poultry products. (See Trade Policies)
Brazil continues to be China’s dominant supplier. Brazil’s rising export price of $2,584 per ton (during the first half of 2013) lowered its market share by 20 percent as compared to the same time last year. In the interim, U.S. export market share increased by 58 percent and its export price is now at $1,142 per ton.
Change to the 2013 import estimate:
Post revised its 2013 import estimate to 260,000 tons based on low consumption caused by the H7N9 bird flu outbreaks.
Post estimates that China’s 2014 broiler meat exports will increase by nearly three percent to 410,000 tons, due to higher consumer demand from Hong Kong, the second largest export market for China.
On May 15, 2013, China’s General Administration of Quality Supervision, Import Quarantine (AQSIQ) and Ministry of Agriculture (MoA) announced China’s decision to lift its ban on Arkansas poultry. That ban has been imposed since June 2008 due to an outbreak of H7N3 low pathogenic bird flu virus. A mere two months later, on July 22, AQSIQ and MOA reinstated the ban on Arkansas poultry due to a H7N7 bird flu outbreak in Scott County. They also banned Wisconsin poultry due to H5N2-B bird flu outbreak. Both events are considered low pathogenic avian influenza by international standards, and should therefore not carry international trade restrictions with them.
On August 2, 2013, the World Trade Organization (WTO) announced that a dispute settlement panel ruled that the anti-dumping (AD) and countervailing duties (CVD), imposed by the People’s Republic of China since 2010 on chicken imports from the United States, are unjustified under international trade rules