Friday, March 5, 2010

China Tariffs Could Mean Trouble for Texas Poultry Industry

We are all expecting 2010 to show significant signs of improvement for our economy, but the article attached below indicates 2010 is starting out with tough obstacles for U.S. poultry producers.

The article below from, describes new import tariffs being placed on U.S. poultry headed to China. Our poultry producers have already faced significant challenges over the past few years with many of our leading companies struggling with extreme financial difficulties. Lone Star State producers have been especially hard hit due to an ongoing Chinese ban on Texas poultry which began in January 2009. Assuming a resolution to the Chinese ban can be found, Texas producers will still face the burden of these new, across-the-board tariffs being placed on U.S. poultry.

Hopefully our U.S. trade negotiators can find quick solutions to this issue. Losing market access to places like China and Russia for any extended time period will mean the loss of jobs and investment in the U.S., and certainly here in Texas.

This article demonstrates how important open markets are for all U.S. agriculture producers, and frankly, to you the consumer. By selling abroad and maintaining a stable economic future for our companies, domestic consumers can be assured of a continued, safe and local food supply that’s affordable.

U.S. poultry industry hit hard by China tariffs
By Meatingplace Editors on 3/1/2010

U.S. poultry companies are taking a "big hit" from tariffs placed on U.S. chicken imports by China in February as the repercussions reverberate across the industry, the USA Poultry & Egg Export Council said.

U.S. companies exported $649.2 million worth of chicken products to China last year, making China the second-largest importer of U.S. chicken behind Russia, according to USAPEEC.

But tariffs of up to 105.4 percent on U.S. chicken imports that went into effect on Feb. 13 have caused that market to dry up. Companies have 20 days to appeal the decision.

"The anti-dumping duties exclude U.S. chicken from the Chinese market. It just makes it not feasible to ship there. We're out of the market, period," USAPEEC spokesman Toby Moore told Meatingplace.

About half of the exports to China are chicken paws, which have little value in the United States but can fetch 60 cents to 80 cents a pound in China. The remainder consists of wing tips, mid-joints and leg quarters.

Other markets such as Hong Kong, the Philippines and Vietnam are absorbing some, but not all, of the U.S. chicken that would have been destined for China. "We're hearing some companies are just shutting down paw production completely," Moore said in an interview.

China imposed the duties after its Ministry of Commerce (MOFCOM) conducted an unfair trade practices investigation last fall and concluded the country's local producers had been hurt by U.S. products sold at unfairly low prices.

All U.S. processors are subject to the tariffs, which vary by company. The schedule of tariffs is posted on MOFCOM's Web site.

Three companies selected to participate in MOFCOM's investigation received individualized import duties, with Tyson Foods at 43.1 percent, Keystone Foods at 44 percent and Pilgrim's Pride at 80.5 percent.

Companies that registered for the investigation but were not selected, including Sanderson Farms, would pay a weighted average rate of 64.5 percent. All others face the highest tariff of 105.4 percent.

Sanderson Farms last week said it is appealing the duty. (See on Meatingplace, Feb. 23, 2010.)

USAPEEC says it is protesting the tariffs on behalf of the industry on the grounds that U.S. export practices do not constitute dumping. China's Commerce Ministry is expected to make a final determination this fall, Moore said.

U.S. companies also face separate Chinese tariffs known as countervailing duties, on top of the anti-dumping duties, stemming from China's contention that U.S. feed grain subsidies are illegal.

U.S. exporters have also been shut out of the Russian market due to the country's recent ban on poultry rinsed with chlorine.

"We're out of China and we're out of Russia in one fell swoop," Moore said.

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