November 27, 2006

 

FAO links rising import surges of poultry meat to market impacts

 

 

Import surges of poultry meat have been experienced in recent years, particularly in Africa, which has been linked to disruptive market impacts, says the FAO report released during the Twenty-first Session of the intergovernmental group on meat and dairy products.

 

The above has been a result of many factors, both domestic and external, with changes in market access under regional trading agreements being an important contributing factor.

 

The frequency of dairy surges has increased; however, the tendency has been for a gradual increase in imports, putting domestic processors under pressure, adds the report.

 

Under the Special Safeguard provisions (SSG) of the WTO Agreement on Agriculture, provisions, an import surge occurs when there is a sharp rise in import volumes or a sharp fall in import prices relative to defined volume and price triggers.

 

Some observers attribute the rising incidence of import surges to the opening up of markets as a result of the implementation of the WTO Agreement on agriculture in an environment where export and domestic subsidisation, particularly for poultry and dairy products,

are often held responsible for disruptive surges of low priced supplies, says the FAO report.

 

Some of the external factors determining the occurrence of import surges, according to the report include increasingly competitive position of major exporting countries resulting from differential developments in production, processing and transport technology, market shocks resulting from sudden devaluations in developing countries that are large poultry exporting or importing countries, outbreaks of diseases like avian influenza, which influence

trading patterns and result in stock accumulation by exporting countries.

 

Domestic factors include lowering of national tariffs, changing consumer preferences in importing countries and variation in national exchange rates to name a few.

 

Generally, countries have been unprepared to deal with such events, lacking appropriate trade surveillance mechanisms, in particular, lack of institutional arrangements, and insufficient data and analytical structures, notes the report.

 

Trade restraint measures intended to alleviate the difficulties of local producers, unless accompanied by strategies to develop production and encourage investment and innovation, may meet with only limited success. For example, the quota limitation imposed on poultry imports in one of the case study countries was difficult to enforce and, even faced with lower imports, the domestic industry was unable to compensate for reductions in market supplies, with a resultant rise in prices. Rising domestic prices of animal protein can become a matter of concern to consumers, particularly in urban areas.

 

Consumers have benefited from expanding supplies of lower priced chicken parts, but producers, particularly smaller operations, have suffered and many have withdrawn from the market.

 

For the full report, click here