Argentina's broiler exports to China grow on price advantage
As a result of Argentina's low production costs, broiler exports to China have grown at a remarkable rate - an increase of 652% from 2005 to 2008.
Many Chinese diners are already familiar with Argentina's beef, but over the past three years they have also begun to eat Argentine chicken paws.
As a result of Argentina's low production costs, broiler exports to China have grown at a remarkable rate – an increase of 652% from 2005 to 2008, from just 24,188 tons in 2005 to 181,828 tons in 2008, according to China Customs statistics.
The value of the exports soared 1,084%, from US$19 million in 2005 to US$225 million in November 2008, the latest data available from China’s Ministry of Commerce.
According to China Customs, the exports mostly consist of chicken paws, which accounted for 85% of broiler export value, with more than 150,000 tons of paws exported from Argentina to China in 2008.
Preparing chicken paws for export
Argentina is an attractive source for China's poultry buyers due to its cheap feed and inexpensive labor. Its price advantage also helps Argentina to challenge other competitors such as the United States.
“The price advantage is a major reason for Argentina’s growing broiler exports, because low prices are very important for Chinese importers,” Guo Huiyong, an analyst at Beijing-based research firm Orient Agribusiness Consultant, Ltd., told Poultry International.
For example, the cost, insurance and freight for Argentine frozen chicken paws was US$50 per ton less than that of U.S. frozen chicken wings, according to 2008 China Customs statistics.
As a result, Argentine frozen chicken paws accounted for 34% of total frozen chicken paw imports in 2008, an increase of 14 percentage points compared to 2007, according to official statistics. Meanwhile, U.S. frozen chicken paws accounted for 60% of total Chinese frozen chicken paw imports in 2008, an increase of 4 percentage points compared to 2007.
One company that switched is Hebei-based Tianpeng Export & Import Group Co., Ltd.
“My company used to import broiler parts such as chicken paws from the United States,” Tian Manyi, a manager in Tianpeng's import department, told Poultry International. “But now, we prefer buying it from Argentina. It has the same quality, but better price.”
Currently, his company is negotiating with several Argentine suppliers for a long-term cooperation agreement, added Tian. The gains came mostly at the expense of Brazil, where Chinese shipping restrictions severely cut import volumes.
As a result, broiler imports from Brazil declined from more than 160,000 tons in 2007 to just 10,550 tons in 2008, according to China Customs statistics. During the same period, imports from Argentina increased by 80,000 tons, and imports from the U.S. increased by 10,000 tons to offset the drop. - By Coco Liu, WATT China Bureau