Poultry trade bans: understanding the economic impact

Learn why a total trade ban in response to poultry disease outbreaks should be carefully instituted and why regional restriction may be a better option.

apu, Bigstockphoto.com
apu, Bigstockphoto.com

Trade bans in response to a disease outbreak, for example, avian influenza, can be costly.

If a ban is too broadly applied, then concerns are usually raised by the country that has lost its export markets, but the country instituting the ban may also have a price to pay, particularly if it sees its other sources of supply disrupted.

Take for example, South Korea and its imports of chicken meat and eggs from the U.S., which were halted in their entirety in response to outbreaks of avian influenza.

While Brazil may be the largest exporter of poultry meat to South Korea, the U.S. is also a major supplier, and where processed eggs are concerned, it is the main overseas source of supply.

In 2014, the last full year without any highly pathogenic avian influenza (HPAI) restrictions in place, South Korea imported US$122 million in U.S. poultry products, including eggs. The U.S. represented a significant source of supply, accounting for a little over 10 percent of the imports of chicken meat and eggs combined.

Disease outbreaks at home

Losing a major supplier in its entirety can cause major disruption, but for the South Korean market, problems have been compounded by also having to deal with issues much closer to home.

The country has had problems within its own production system and, towards to the end of 2016, implemented yet another massive cull of birds in its ongoing effort to control avian influenza, further harming its domestic supply of poultry meat and eggs. Some 20 percent of the country’s poultry flock was lost, exacerbating supply issues, particularly in the egg market.

South Korea suffered a double hit. Not only were its domestic sources of supply severely affected, but relationships with one of its major suppliers of chicken and eggs had been cut in their entirety. Had a more selective approach to the U.S. been adopted, it may have been possible for its U.S. suppliers to send product from unaffected areas.

More selective, stable future?

In April this year, it was forecast that the country would have to import 145,000 tonnes of broiler meat – a 13 percent increase from last year, to make up for shortages and, at that time, it could not be sourced from one of its major trading partners.

Earlier this year, discussions were started between Korean and U.S. officials to reopen the market for U.S. product; however; a disease outbreak in the U.S. state of Tennessee resulted in South Korea’s blanket ban continuing.

Where eggs are concerned, in an attempt to respond to local demand, South Korea adopted a temporary measure allowing eggs and egg products to enter the country duty free. It has also partially subsidized air freight to increase supply. Supplies have been sought from a variety of countries, but this has not always been easy.

South Korea has now lifted its ban on U.S. poultry and poultry products including fresh eggs. United States Department of Agriculture (USDA) officials are continuing to work with their counterparts in South Korea to limit any future import restrictions to only affected areas, rather than being applied to the whole country, and if this is successful, it may be beneficial to both parties.

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