2020 was a positive year for U.S. poultry exports despite the pandemic. Exports to China soared; trade with standing partners was steady and more than 17% of total U.S. broiler production was exported.
As part of the USAPEEC 2021 Annual Meeting in Nashville, Tennessee, USA Poultry and Egg Export Council President Jim Sumner, reviewed the state of U.S. chicken exports and factors affecting the international market. He spoke on June 24, 2021.
2020 performance
In total, poultry and egg exports were worth $4.5 billion in 2020, a slight increase from 2019. Sumner said the performance was nothing short of amazing. Access to China, restored in 2020, was the key factor to success.
Since 1990, the total percentage of U.S. chicken production exported increased to 17.4% from 6.1%. That is impressive, he said, given that chicken production steadily increased during that period. Over the past five years, the total value of poultry exports has steadily risen, too, bringing the total value close to highly pathogenic avian influenza (HPAI) heights.
Feed and protein markets
Corn and soybean prices are near record highs, but Sumner said, the chicken industry is uniquely positioned to succeed in this scenario. Chicken, in terms of feed input to meat output, is the most efficient terrestrial protein. Plus, no new production is coming online soon as many integrators built and opened new plants in recent years. The industry tends to operate more efficiently when feed prices are high, too.
On export terms, the U.S. is at an advantage because it does not need to import grain and its domestic production and prices are competitive at a global level.
African swine fever
The African swine fever (ASF), overshadowed by the COVID-19 pandemic, continues to cause issues in China and around the world. New variants are appearing in China while the disease is appearing in new countries like the Philippines.
ASF is beneficial to poultry, Sumner said, because it increased poultry’s standing in countries that were formerly major consumers of pork. The availability of chicken is a great asset and helps to close the gap, long term, between the two meats.
In terms of world meat production, chicken is king. Chicken production passed global pork production in 2018 and chicken maintained the lead, Sumner explained.
Global challenges
The collapse of the foodservice sector in 2020, on-going shipping disruptions and HPAI outbreaks around the world have continued into 2021.
HPAI is beneficial to the U.S. in terms of the disease, largely due to its absence from the western hemisphere. This eliminated some traditional competition, especially coming from Europe, in some Asian markets.
A newly updated World Organization for Animal Health (OIE) policy will provide a major boom to the U.S. industry. The influential OIE guidelines will call for a 28 day ban – from the date of cleaning and disinfection – on trade after detection of HPAI, rather than a 90 day ban. This helps the U.S. re-enter markets in shorter timeframes if the issue reemerges.
Key market review
China: The U.S. returned to the Chinese market in 2020, which proved to be an ideal time. Sumner said a major deal was brokered as part of the so-called Phase One trade agreement between the U.S. and China. Regionalization policies were enacted requiring that China could only ban imports from a single state, rather than all U.S. exports, due to HPAI. Sumner said that was tested in March 2020 and China held true to the agreement.
COVID-19 concerns do remain as China has suspended some trade with the U.S. due to detection of the disease. This led to the indefinite delisting of two plants and two temporary suspensions due to COVID-19 detection on product packaging. The last COVID-19 trade issue occurred in February 2021.
North America: Mexico is the top export destination for U.S. chicken, turkey and eggs. Mexico is a critical trading partner and a reason for that success is the free trade agreement removing tariffs and quotas on the product. Sumner said the objective is to maintain a positive relationship with the Mexican industry as much as possible. The U.S. Mexico Canada agreement did not improve the poultry trading relationship with Canada.
India: Sumner said India is a huge opportunity for the U.S. and could one day be a bigger market than China. High barriers to trade – a 100% tariff on chicken and 30% tariff on turkey – exist, but there is hope those can be overcome. There is already some trade and hopes are bright for the future.
Asian markets: The U.S. is finding success in Asia. 2020 was a record year for exports to Taiwan. Vietnam is now a top 10 export market and the 2021 ASF outbreak in the Philippines will increase poultry demand. The U.S. continues to deal with issues inhibiting trade with Korea, but that country, along with Japan, are key egg importing nations due to their own issues with HPAI.
The Middle East: Saudi Arabia is looking to enact a three-month shelf-life rule for all poultry imports. Sumner said the rule is part of a continuing mission to limit chicken imports to the country, but it will be contested to avoid setting an international precedent. Egypt, formerly a good market, is allowing some chicken parts in for processing which Brazil is taking advantage of, so the U.S. wants to be involved too.
African markets: Trade issues with South Africa never end, Sumner said, but the country is still a reliable market for between 60,000 to 70,000 tons of chicken annually. The U.S. is finding success in Angola and Ghana, and the entire continent is ripe with opportunity in the future.
The Central American Free Trade Agreement is a plus for the industry. Guatemala is a free trade zone currently while Honduras, El Salvador and Nicaragua will retain quotas until 2023. In 2025, Costa Rica and the Dominican Republic will open for completely free trade. The opening will represent a tremendous opportunity for U.S. poultry.
Poultry is a bright spot in 2021 global meat trade www.WATTPoultry.com/articles/43135
