September 24, 2009

There have been increasing calls from China's chicken producers for action against imports of cheap chicken from the US which some claim benefit from state subsidies.

 

In particular, a type of chicken known as poulard, a young hen that has been spayed for fattening, is being targeted.

 

She Feng, general manager of Beijing-based Huadu Foodstuff, the biggest chicken provider for the Beijing 2008 Olympic Games, said this type of cheap chickens has been eating into their profits.

 

China announced dumping and subsidy probes on chicken and auto products from the US on September 13, two days after US President Barack Obama imposed tariffs on tires from China.

 

The dumping investigation relates to the poultry industry alone, according to a spokesman from the Ministry of Commerce.

 

Ma Chuang, deputy secretary-general of the China Animal Agriculture Association, said investigations into the issue, which were based on complaints from domestic companies and other relevant investigations, had been going on for nearly six months and the results were sent to the Ministry of Commerce formally in August.

 

Over the past three years, Chinese poulard producers have seen their profits decline, with the situation worsening since the second half of 2008. During that period, China's imports of poulard rose sharply, according to data from the Ministry of Commerce.

 

Last year, China imported 790,000 tonnes of poulard products, of which more than 73.4 percent was from the US. In the first half of this year, more than 300,000 tonnes, or 89 percent of China's imported poulard products, were from the US.

 

Ma said US poulard was cheaper than domestic poulard by RMB300-500/tonne (US$43.94-US$73.23/tonne).

 

Luan Wentong, vice-chairman of Shandong Industrial and Commercial Federation, told Shandong's lawmakers in February this year that imports of cheap poulard were forcing more than 6,800 local producers to struggle for survival.

 

Shandong province is the main domestic base for poulard production, accounting for 20 percent of the industry and 50 percent of China's exports.

 

According to data collected by Luan, imported chicken thighs cost RMB5,000/tonne after freight and RMB7,000/tonne at the market while the average cost of domestic processing companies is RMB9,000/tonne.

 

Ma said subsidy support from the US government for soy and maize reduced the feed cost of poulard products. Feed makes up 70 percent of the entire cost of rearing poulard. Ma added that other benefits such as credit support were also provided by the US government to stimulate exports.

 

In June, China said it had asked the World Trade Organisation (WTO) to set up an expert panel to investigate US restrictions on imports of Chinese poultry products. Beijing told the WTO's dispute settlement body that Washington had imposed protectionist measures in completely banning Chinese chicken products entering the US market.

 

In response, the US said it was examining whether Chinese poultry was safe for human consumption.

 

US$1=RMB6.828 (Sep 24)