Chicken processors caught in cross-fire of US-China trade row

15-Sep-2009 - Last updated on 16-Sep-2009 at 10:27 GMT

Related tags Chicken International trade

The US chicken processing industry has been caught in the fallout of a high-level trade dispute between Washington and Beijing that could damage its exports to China, a major industry body has said.

“We are innocent bystanders being put in the cross-fire,” Richard L Lobb of the US National Chicken Council (NCC) told FoodProductionDaily.com.

Potential impact

The NCC was reacting to news that China had launched an investigation into whether US chicken imports were being dumped into the Chinese market. Many analysts believe the move is a tactical one in response to a US decision to impose tariffs on tyres imported from China.

China is a major market for US chicken. In the first seven months of 2009 the US exported 436,544 metric tons of chicken, valued at $376m. In 2008, the chicken trade with China totalled 757,786 metric tons valued at $682m.

“If the Chinese Government really means business on this anti-dumping investigation and imposes a measure like a tariff quota, then it could have an impact,’” said Lobb.

He added: “Clearly, it is something we would like to see resolved and we are hoping China will back off. China has really played by the rules since export markets were opened up eight or nine years ago – it would be unfortunate to see it get messed up by political considerations.”

Dumping denied

The chicken trade association has dismissed the dumping charge and declared the Chinese are seeking to make a point not just about tyres but also over US trade policy on chicken imports from China.

“Charges of dumping of poultry products are completely unjustified,” said an NCC statement.

It added: “Our companies engage in normal trade with China, not dumping. We believe chicken is being targeted by the Chinese because of the concerns they have expressed over the provision in the US appropriations act that prohibits the U.S. Department of Agriculture from determining China's ability to ship fully cooked poultry products to the United States."

NCC members rely heavily on the Chinese market for most of their exports of chicken paws – which make up around 50 per cent of almost $700m chicken trade to China. Without this market, US chicken producers and processors would be forced to sell these products to renderers at a fraction of the price.

"If we weren't selling them to China for 60 to 80 cents, we would be selling them in the US for rendering purposes for pennies on the pound. Obviously we are not dumping," said Jim Sumner, president of the US Poultry and Egg Export Council.

Bottom line

Disruption to chicken paw trade would hit US chicken processors’ bottom line, Lobb confirmed.

In trade terms dumping means selling a product at below market price to either win market share or off-load excess inventory.

Poultry analyst Paul Aho said: "For paws (chicken feet), we sell them at way above market prices, because here they are worthless. So, it is the total opposite of dumping."

China is also a big market for US chicken leg quarters. US consumers prefer white to dark meat, explained Lobb and therefore the trade in legs is also important for NCC members.