2013 has been a roller-coaster ride for U.S. poultry producers. Exports have increased, but haven’t lived up to early growth prospects as avian flu outbreaks on two continents have wreaked havoc with demand.
The year started on an upswing. In January, U.S. poultry meat exports totaled 370,872 metric tons, up 8.6 percent from January 2012. January exports to China totaled 17,933 metric tons, up 229 percent, and those to Russia soared 207 percent to 22,859 metric tons. Though neither country is in the top five markets for U.S. poultry, both have held the top spot at different times within the last decade, so exporters welcomed the renewed interest.
In April, growth in exports to China slowed dramatically when consumers there cut back on poultry purchases, both domestic and imported. A new strain of avian flu was discovered in the domestic Chinese flock that as of June 30 had hospitalized 134 people and killed 43 people.
China responded to the new strain by closing traditional live poultry markets and killing millions of chicken nationwide. Consumers responded by avoiding poultry, at home and in restaurants.
“We thought that people would try to avoid domestic chicken, and have more preference for imported chicken, but this is not the case. Across the board, people are being more cautious,” Sarah Li, director of the USA Poultry & Egg Export Council’s Hong Kong office, told reporters in China last spring. “According to our importers, (wholesale) sales for both imported and domestic chicken products have declined by 80 percent.”
Yum! Brands, which owns Kentucky Fried Chicken, Pizza Hut and Taco Bell, saw its revenue in China plunge 36 percent in April year-over-year. Yum! reported in mid-June that the decreases were moderating, saying May sales in China were down just 19 percent compared to the same month in 2012.
Last month, Chinese officials also reported that the avian flu virus was under control and wouldn’t be a factor at least until next winter. The stock market responded with higher prices for poultry exporting companies and fast food chains.
“It’s too early to tell what impact this will have on exports,” said Jim Sumner, president of the USA Poultry and Egg Export Council. “But consumption in China is returning to normal, so we hope exports will rise along with consumption.”
Just as exports were climbing out of China’s demand dip, the outlook plunged back into uncertainty after officials in Arkansas confirmed that a mild strain of avian flu had been discovered in a flock there. Officials in China, Russia and Japan announced June 26 that imported poultry meat from Arkansas would be banned.
Although Arkansas is the second-largest poultry-producing state behind Georgia, there is enough production elsewhere to cover exports to China, Russia and Japan with no direct impact expected. The main issue is how long the bans will stay in place and if other countries will follow suit.
Arkansas state officials hope the embargoes are lifted within the next few months, but note that China often keeps such actions in place for years. China closed its borders to chicken from Arkansas in 2008 after the last reported case of avian flu there. It took almost four years and a trip by Arkansas Gov. Jim Beebe before the embargo was lifted in 2012.
Poultry shippers did get two bits of good trade news in June. The World Trade Organization refused to dismiss a U.S. challenge to India’s poultry import policy that virtually bans any imports of U.S. poultry meat, eggs or egg products. The U.S. argued that India’s policy amounts to an illegal trade barrier, thinly disguised as an issue of health and safety. Sales of poultry and eggs to India totaled 1,604 metric tons in 2002. During the first five months of 2013, U.S. producers sold 1,322 pounds of egg products to the country.
India has banned the products, citing an avian flu discovery in the U.S., but the U.S. says India is violating an internationally recognized scientific standard.
India’s policy makes no distinction between the high-pathogenic version of bird flu that can cause disease and the so-called low-pathogenic version that can’t, contrary to the international standards. Only low-pathogenic bird flu has been found in the U.S. since 2004, according to U.S. officials. The dispute is expected to be heard by a WTO panel before the end of the year.
President Obama also publicly added the poultry industry to the list of issues he will push during negotiations with the European Union on a proposed Trans-Atlantic Trade and Investment Partnership.
The U.S. poultry industry said it is missing out on a market it estimates at about $600 million each year. European countries have banned U.S. poultry meat since 1996, because the U.S. allows using hyper-chlorinated water to kill bacteria such as salmonella in chicken meat. The National Chicken Council and the USAPEEC say the method is safe and the embargo is a non-tariff trade barrier used by European politicians to protect their poultry industry from cheaper U.S. imports.
Contact Stephanie Nall at firstname.lastname@example.org.