China, Africa important to US poultry's trade success in 2013

A reopening of China to U.S. poultry has proved elusive for U.S. producers. Will trade there resume in 2013? Jim Sumner, president, USA Poultry & Egg Export Council, answers questions about trade opportunities.

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Jim Sumner, president, USA Poultry & Egg Export Council
Jim Sumner, president, USA Poultry & Egg Export Council

WATT PoultryUSA:  With the U.S. poultry industry having shipped record levels of exports in the past year, what’s the export outlook for 2013?

Jim Sumner:  U.S. poultry and egg exporters, I believe, can build upon the momentum that they currently have going. Prices of poultry exports have continued to be at proportionately high levels, and that’s been to the industry’s benefit. Now, we’re looking at opening new markets.

One of the things that has affected U.S. poultry exports – partly positively and partly negatively – are the high feed grain prices. Even though this has been a problem for our domestic industry, it’s a bigger problem for so many other countries around the world that don’t have the access to the bountiful supply of grains that we do in the United States. So this puts us in a more favorable position with many of our exporting countries. So, I’m pleased that we are moving in the right direction. This makes us much more competitive.

WATT PoultryUSA:  What is the status of export markets going into 2013?

Sumner:  The U.S. poultry industry just finished a record year for broiler, turkey and egg exports. We are now exporting around 21 percent of all of the broilers that we’re producing in the United States based on a tonnage basis, over 13 percent of our total turkey production and over 4 percent of our total egg production. On top of that, the prices have been more stable than ever before, especially for chicken leg quarters, we have stayed above 50 cents a pound for every month of the year, which has never happened before.

And on the turkey side, it’s been a very strong year, too. Boneless thigh meat prices have recently reached their highest levels for the year and for quite some time. And we’re also seeing record export volumes and values. In fact, looking at chicken and turkey for the last 10 years, we’ve averaged 5 percent annual increases in both volumes and values of product exported.

Few industries can compare with that kind of a record. I think it’s one of the brightest spots of our industry right now.

WATT PoultryUSA:  The year 2013 is starting in an interesting way, as the U.S. and the EU have announced that they are exploring the possibility of a free trade zone, what would be the world’s largest. How might this develop.

Sumner:  It could be a tremendous thing for the U.S. poultry industry if it were to come about. Several industry organizations have advised our government, both U.S. Trade Representative’s Office and USDA, that any such talks should be predicated on addressing our sanitary and phytosanitary issues.

SPS issues are our biggest impediment with Europe and the reason that we have not exported, for the most part, any chicken or turkey to Europe for the last 16 years. It’s because Europe has used protectionist measures to keep our products out. Of course, their excuse is chlorine, but we addressed that successfully. In fact, the scientific committee of the European Union (EFSA) did studies on alternatives to chlorine for antimicrobial purposes. They ruled in favor of these three or four alternatives, and, yet, when it came to a vote of the commissioners, themselves, they were unanimously opposed to allowing for those additional antimicrobials.

So, yes, a free trade zone would be nice to have, but unfortunately I think it is a long ways away, and from the U.S. poultry industry’s perspective, I see other markets that are much lower hanging fruit than trying to get poultry into the European Union. They are going to protect their interests against U.S. imports with their last dying breath, I’m afraid.

WATT PoultryUSA:  What are the biggest export opportunities for the U.S. poultry producers in the coming year?

Sumner:  From a chicken perspective, our greatest opportunity usually seems to be in developing countries. We have a very low-priced commodity in chicken leg quarters, which is the most cost-effective animal protein available. With tight feed supplies and increasing feed costs, it’s going to be even more important. So, I think there are some opportunities to feed people who are truly hungry throughout the world, especially in developing countries.

WATT PoultryUSA:  Where are the biggest opportunities in developing countries?

Sumner:  Some of the biggest opportunities are in Sub-Saharan Africa, and even northern Africa. We had hoped at this time to be in the Egyptian market. And were it not for the political instability in that country, I think we would be there today. The Egyptian poultry industry is, again, very protective, and they have a government in place that is willing to protect those interests.

Elsewhere in Africa, USAPEEC has been entertaining trade delegations from a number of countries in recent months. We had government delegations coming to Atlanta from Ghana and Senegal that have expressed an interest in working with us on several fronts. We explained that we would be willing to support their domestic industry through the development of workshops on food safety and biosecurity, but at the same time, we expect their borders to be open to our products as well.

Probably the biggest opportunity in Africa is in Nigeria, but it’s a closed market. There are opportunities in Nigeria, but they are going to have to be carefully developed by working with the Nigerian government. Presently, there are imports coming in, but one of them is legal. There are motorcycles and bicycles with chicken coming on the backs of them. So, there are import duty opportunities that the Nigerian government is missing out on.

WATT PoultryUSA:  Is the outlook for getting U.S. exports into China more positive today than it was a year ago?

Sumner:  We are expecting a decision in the very near future on our WTO case on their antidumping, countervailing duty determination, and we are very confident that the ruling is going to come down in our favor in that decision. We’re hopeful that the Chinese government will accept the decision, whatever it is without further appeals. And I have some optimism that they may be prepared to do that. If we can reopen exports to China without the crippling duties that we currently have in place, that will be a great benefit for our industry.

WATT PoultryUSA:  Where does China’s effort stand to get its cooked poultry admitted to the U.S.?

Sumner:  The Food Safety and Inspection Service is to send an audit team to China, in early 2013, to conduct an audit of their facilities. Admittance of Chinese cooked poultry has dragged on for several years, and we would like to see it conclude, hopefully, in a positive way. So USAPEEC has offered to make available some of our consultants to visit some of their facilities, first, to make sure that they are properly prepared for these audits.

We’ve tried to extend a hand of support and friendship to the Chinese, knowing that we need to work together for the future. China and India are our two biggest market opportunities, countries with the greatest population. And quite frankly, if the U.S. poultry industry does not regain market access to China, we’re going to be missing a tremendous opportunity for the future.

WATT PoultryUSA:  Have U.S.-China relations improved enough to impact the poultry trade relationship?

Sumner:  I would like to think there’s a better tone in the U.S.-China relationship. I think U.S. government officials have a better relationship with the newly installed President Xi Jinping than has ever existed with Chinese leaders. That bodes well for our trade relationship in poultry.

We’re encouraged that China has agreed to send over some of their veterinarians from the Ministry of Agriculture and AQSIQ to look at the states of Virginia and Arkansas with our hope of lifting the avian influenza restrictions that have been in place there for several years. I think once they come and see the steps that have been taken, hopefully, that will convince them. China lifted its AI-related restrictions on poultry from Minnesota in late December 2012.

WATT PoultryUSA:  Would a decision in China’s antidumping and countervailing duties case influence the Mexican antidumping case against the U.S.?

Sumner:  If there’s a WTO decision against China in their dumping measures against us, it would send a very strong signal to Mexico that its antidumping case against the U.S. is ill founded and that it should be dropped. Though we think the ruling in Mexico was unjust, the good news is that the duties were never imposed, and that’s unheard of in dumping cases. It’s something we’re watching very closely, especially with the new administration that just took over in Mexico. And we hope we can continue to move forward with this issue, and if need be, we will fight this through a NAFTA panel. We already have our lawyers geared up for this.

WATT PoultryUSA:  You mentioned that poultry prices, especially chicken leg quarter prices, have been holding steady at relatively high prices. Those higher prices help the trade situation in some unexpected ways, don’t they?

Sumner:  The record prices for chicken, over 50 cents a pound for leg quarters, means that our chicken exports to foreign markets are not the threat that they once were. I can remember when chicken leg quarters were being sold for 18 cents a pound. And, of course, any producer in the world who had to compete with 18-cent-a-pound imported leg quarters would scream bloody murder and ask their government for protection. When poultry is coming in at 55 to 60 cents or more, including transportation costs, it’s not near the threat to the domestic industries of other countries that it once was.

So, not only is it beneficial for our producers to be getting higher prices for their leg quarters, but it is much less disruptive to many of our export markets when prices are that high. So, I think we’re reaching a more level balance here in the United States as we’re seeing leg quarter prices, especially boneless leg meat prices, be nearly equal to boneless breast meat prices. And at the same time, this makes the U.S. less of a target for foreign countries who wanted to gain access to our market because our breast meat prices were through the roof. So, there are many benefits to this. And I think our industry is coming to that realization, and this is one of the reasons I’m optimistic for the future for our industry in so many ways. I think we’re going to see record prices domestically which will be partly as a result of our high export prices internationally. So, it all works together. I think there’s a good future for our industry.

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