February 13, 2007

 

US chicken paw market in China under threat
 

 

Although the United States is still the largest chicken paw, wing, and wing-tip supplier to the Chinese market, many challenges, including growing competition from Brazil and Argentina, threaten this position, according to a report on the market for US chicken paw in China.

 

Strict quarantine inspections in China, stipulations on the US side and reluctance by the US industry to invest in new production lines, have cut paw exports to China, the report said.

 

US producers are hesitant to invest in production lines due to slim profit margins and uncertainty surrounding Chinese import regulations. These factors have resulted in a supply deficit of inspected U.S. chicken paws and are reported to have cost the poultry industry significant revenues.

 

The consensus among Chinese traders is that despite the high quality of the US product, issues like moisture content and packaging are affecting its competitiveness with respects to the Brazilian product.

 

Although improvement in quality has been noted over recent years, persisting problems threaten long-term US market share, the report said.

 

However, current chicken paw demand in China exceeds supply, thus lowering the need for further investment, the report noted. In 2006, chicken paw and wing tip/edible offal imports accounted for 40 percent of total poultry imports to China.

 

Moreover, supply does not come easy as 400,000 chickens must be slaughtered to produce one container of paws.

 

The majority of China-produced paws are exported to Japan or Korea, where Prices are higher, according to the report. Due to insufficient domestic supply, China must import approximately 300,000 to 350,000 tonnes of chicken feet and paws annually.

 

Chinese consumers also prefer the size and meatiness of US and Brazilian jumbo paws to the local product. Currently, for every one domestic paw, there are two-and-a-half US chicken paws in the market.

 

Most domestic broiler production is situated in the northern provinces of China. Domestic processors cite that production costs, demand, and lack of profitability force them to produce chicken feet rather than chicken paws. The difference in feet and paws is that the feet include part of the leg bone.

 

Northern provinces, with concentrated production, tend to produce chicken feet, while the southern provinces, with less concentrated production, tend to produce chicken paws.

 

The peak chicken paw consumption season is typically during the warmer months of April through October, the report said.

 

Almost half the chicken paw has an end destination in South China. Most premium jumbo paws are sold in wholesale markets and eventually make their way into high-end restaurants.

 

Smaller paws, chicken wings, and wing tips, in addition to being sold at wholesale markets, end up at wet markets and processing plants, which use them in finished food products. Few importers are willing to deal directly with supermarkets because of payment delays.

 

Larger chicken feet are sold to both wholesale and retail markets and are more commonly used for family consumption while small feet are typically further cooked in processing plants. Chinese consumers in the north-west and north-east tend to favour chicken feet over chicken paws.

 

In 2001, China required that imported chicken paws from the US be inspected by the USDA prior to delivery. However, such inspections meant more costs and resulted in US producers decreasing or even shutting down paw production.

 

However, the report noted that now, more producers are investing in plant upgrades that should increase the exportable supply of chicken paws in 2007.

 

US producers also worry about investing millions of dollars in production line changes, only to have China impose restrictions at the first sign of disease or residue violations, as happened in 2005.

 

China's current zero tolerance salmonella policy on uncooked poultry is also deterring US processors.

 

Moreover, beginning March 3, 2007, China will require e-certification from US meat exporters to limit grey-channel importing. To comply, US plants must send an e-mail to AQSIQ (Quality Supervision and Inspection Quarantine) and with the date and certificate number for verification.

 

The Chinese traders' responses have been mixed. However, all importers stressed the importance that plants ensure the information sent via e-mail is identical to that stated in the certificate to prevent time -consuming expensive delays.