February 5, 2010

China to levy anti-dumping duties on US chickens

 

The Chinese Commerce Ministry announced Friday that anti-dumping duties will be levied on US chicken imports.

The ministry said its initial investigation showed that US companies had dumped chicken products into the Chinese market.

The US and China are engaged in a series of trade disputes. Chicken wings and feet, virtually worthless in the US market, are popular in southern China. Many US poultry producers count on the Chinese market to round out their profits.

Wang Xiulin, president of the Chinese Poultry Association, said chicken wings and feet are unwanted in the US so they were sold to China, and they were dumped at below cost.

She said for over a decade, the US has sent large volumes of chicken to the Chinese market, hurting local producers. Last year, the Chinese poultry industry was so badly affected that the investigation was requested, Wang added.

Tyson Foods got the lowest duty of 43.1%. Pilgrim's Pride was hit with an 80.5% duty. Most other firms, including Sanderson Farms, face a 64.5% duty.

Those that did not appeal the finding would pay duties of 105.4%, the ministry said.

Duties will go into force on February 13 on the Chinese New Year's Eve, ensuring the price of the popular delicacies remain steady for holiday shoppers already fretting about vegetable inflation.

The new tariffs could close a lucrative market for the US poultry industry, which supplies more than three quarters of China's imports.

Chicken feet and wings cost two US cents per pound in the US, but land in China at about 42 US cents - a figure that Chinese rivals say represents the cost of the freight only.

A flat import tax of RMB500 (US$73) a tonne and a 13% value-added tax mean US wings and feet can enter the Chinese market at about 54 cents a pound - compared to the Chinese wholesale price of about 76 cents.

Additional duties mean that US imported chicken parts will cost about five cents per pound more than their Chinese competitors.

This could also raise costs for Chinese consumers, since most excess Chinese production is already soaked up by Yum Brands Inc.'s popular KFC chain, which buys about one-quarter of the chicken thighs grown in China.