China is the world’s 2nd largest poultry market but it’s strict policy on avian influenza has made trade particularly difficult in recent years meaning that consumer demands are not being met.
Poultry exports from the United States were banned in January 2015, due to high pathogenic avian influenza (HPAI) outbreaks. In the absence of US suppliers, Brazil has been the top beneficiary.
Poultry import restrictions
China imposes avian influenza-related import restrictions that are inconsistent with World Organization for Animal Health (OIE) guidelines. Many countries have utilised regionalisation policies rather than country bans to protect their consumers while allowing trade to flow following OIE guidelines, China meanwhile has an outright ban on US poultry imports.
Other policies China has imposed that are inconsistent with OIE guidelines are suspensions of states due to low-pathogenic avian influenza. OIE guidelines do not recommend trade suspension on poultry meat due to low pathogenicity notifiable avian Influenza detections.
Poultry imports to China however, are expected to rise in 2016, with forecasts pushing upwards to 400,000 tonnes. Imports from South American countries are increasing and in particular from Brazil as more poultry plants are now exporting their produce to China.
Leading poultry export markets
China's 2016 broiler meat exports are forecast at 380,000 tonnes for 2016. Japan and Hong Kong are the leading export destinations for Chinese poultry, with a market share of 42% and 34% respectively. Japan's purchases of Chinese poultry have declined more than 20% since 2014, spurred by high profile food scares in China.
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Regarding poultry exports to Europe, China has filed a complaint with the World Trade Organization over the EU's high poultry tariffs. The EU import quota established a low-tariff rate for a set amount of poultry imports. Much of the quota was awarded to Brazil and Thailand while only 4% was reserved for China. Poultry that falls outside the quota are subject to tariffs of approximately 40%.
Production restricted by dwindling grandparent stocks
The year 2015 saw a higher production of white-feathered broiler meat in China, in the region of 13.4 million tonnes. Estimates for 2016 production however are down to 12.7 million tonnes, with HPAI outbreaks around the world making it difficult for Chinese producers to replenish their white-feathered broiler stocks.
China relies on imports of the grandparent stocks for white broiler meat, and the United States once accounted for approximately 90% imports while France and New Zealand supplied the remaining imports. In January 2015, China banned US poultry imports because of HPAI detections in the United States. China banned France for HPAI in the fall of 2015 leaving only New Zealand and other small suppliers eligible to export to China. However, these smaller players have limited supply to meet China's demand.
To deal with reduced grandparent stocks, some Chinese operations have utilised forced-moulting to extend the breeding span of both grandparent and parent stocks of white-feathered broilers. With the supply of grandparent stocks disrupted it is forecast that white-feathered broiler meat production will drop 10% in 2016.
Yellow-feathered broiler meat production will increase but overall broiler meat production will decline.
Chinese poultry consumption falling
Poultry consumption estimates have seen multiple revisions for 2015 and 2016 as the market adjusts to changes in production and imports. The current 2016 consumption forecast has been revised downwards to 12.72 million tonnes.
The changing manufacturing structure in China, with more factories closing as a result of production moving to lower cost countries, has reduced the number of factory canteens where white-feathered broiler meat was once widely consumed by workers because of its low cost.
According to industry sources, another factor hindering white-feathered broiler meat consumption are the high fees charged for slot space by some supermarkets because white-feathered broiler breast meat is perceived to be less popular than wings, legs, and paws.
The main outlet for yellow-feathered broiler meat is wet markets. However, the government has a goal to end live bird slaughtering in wet markets as part of its efforts to enhance food safety and prevent AI from spreading to humans and hamper consumption.