The U.S. poultry industry has recovered much faster than expected in 2016 from the most devastating loss ever in trade in poultry and eggs due to last year’s highly pathogenic avian influenza (HPAI) outbreaks.
U.S. poultry producers suffered $1.3 billion in direct losses from the HPAI outbreaks, but they suffered even greater losses – an estimated $2.9 billion – due to declines in product values on the domestic market. In total U.S. poultry industry losses totaled $4.2 billion.
”The U.S. poultry industry has just come off of its most devastating loss in history and is in the process of rebounding quite well,” said Jim Sumner, president of the USA Poultry & Egg Export Council (USAPEEC).
Speaking at the USAPEEC 2016 annual meeting, Sumner ticked of the good news for attendees:
- Globally, U.S. poultry exports are becoming very competitive.
- Prices of chicken leg quarters are rebounding, having tripled in four months.
- Inventories of U.S. chicken leg quarters are at the lowest level in several years.
“Leg quarter prices have rebounded from around 13 cents a pound to the high thirties in about a four month period. There are many companies that have no inventory to sell. It is amazing how things have changed,” Sumner said.
Reopening closed markets the top priority
Having faced countrywide bans of U.S. poultry products by 18 countries and state or regional bans at the state by 43 countries, USAPEEC’s No. 1 priority in 2016 has been to reopen closed markets.
Sumner showed the list of 32 countries that lifted bans of U.S. poultry and eggs but with total poultry and egg export values down 24 percent in the first four months of 2016, the industry still has its work cut out to reopen some important markets – including South Korea and China.
South Korea was developing into one of the best markets for U.S. poultry exports, when the HPAI outbreaks occurred. South Korea, however, does not recognize regionalization in its market closures. Upon this year’s avian influenza outbreak in Indiana, South Korea banned all U.S. poultry.
“We expect South Korea’s restrictions on U.S. poultry to be lifted in the next couple of weeks,” Sumner said.
U.S. poultry’s access to the China market is a much more complicated problem, Sumner said, with China facing a number of issues influencing its policy.
- China has a depressed economy, reducing demand for poultry.
- Consumers are acutely concerned about food safety and animal disease issues.
- There is overproduction and under-consumption of poultry.
Additionally, China remains concerned about its inability to export poultry to the U.S. market. U.S. and Chinese officials have pledged to work toward gaining access for cooked poultry from China into the U.S. market, and the U.S. has initiated the internal regulatory process to make this happen. The Food Safety and Inspection Service published a notice in March that China’s poultry slaughter inspection system meets U.S. food safety requirements.
Other developing issues facing the U.S. poultry industry:
- Trans-Pacific Partnership (TPP) likely won’t get approval by Congress this year but would provide the U.S. poultry industry additional access to Canada and result in lower duties in Japan.
- The Transatlantic Trade and Investment Partnership (TTIP) has no chance of approval this year, maybe never.
- Weak Brazilian economy and political shakeups and potentially higher feed costs
- The anti-trade sentiment among U.S. voters