China Poultry consumption to remain flat in 2016

by Editor fleischwirtschaft.com
Wednesday, August 26, 2015
Photo: Uschi Dreiucker / pixelio.de
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China banned imports of all poultry and poultry products from the United States in January 2015 due to high pathogenic avian influenza (HPAI) outbreaks in the United States.

Imports from Brazil and other South American countries have benefited from the absence of U.S. suppliers.

Post forecasts 2016 broiler meat imports at 200 thousand tons, a decrease of 7% compared to USDA’s 2015 official figure. Post forecasts China’s 2016 broiler meat consumption at 12.8 million tons largely unchanged from USDA’s 2015 official estimate.

Production

Meat from white-feathered western type birds and yellow-feathered local breeds dominate China’s broiler meat production. Post forecasts China’s 2016 broiler meat production at 13.1 million tons, mirroring USDA’s 2015 official figure. A slight shift in consumption from pork to poultry meat underpins the production forecast. Poultry meat and pork are substitute meat options for Chinese consumers and pork prices are predicted to remain high in 2016 because of decreased sow stocks. In January 2015, China banned U.S. poultry imports because of HPAI detections in the United States. The ban impacts China’s white broiler meat production since it relies on the United States for grandparent breeding stock for its domestic production. China has long favored breeding stock from the United States as it tries to improve its own production efficiency.  A continued ban could result in lower 2017 production levels. While some decline in white-feathered broiler meat is anticipated in 2016, an uptick in yellow broiler meat production will offset declines white broiler production to maintain overall production levels. Importers have looked to other sources for breeding stock, particularly to Europe. However, the potential resumption of U.S. imports is a challenge to increasing breeding stock production in those countries.

Consumption

Post forecasts China’s 2016 broiler meat consumption at 12.87 million tons, slightly below USDA’s official 2015 estimates. The overall economic picture for China, slower economic growth, and constraints on banquet spending per government policy remain in place. Additionally domestic bird flu cases, food safety scandals, and media reports of smuggled meat sold to consumers conspire to restrain consumption. Record high pork prices are encouraging consumers to move away from pork but both yellow and white broiler meat producers still need to overcome other challenges to satisfy consumers. Traditional yellow-feathered chicken producers must contend with the government’s desire to end live bird slaughtering in wet markets as part of its efforts to prevent AI from spreading to humans. Additionally, they must contend with a combination of China’s urbanization drive and the younger generation’s preference for processed chicken sold at fast food outlets and fresh/frozen broiler meat products sold in supermarkets. White broiler meat consumption is hampered by association with past fast food scandals and health concerns. Single store sales at fast food restaurants are going down and sales increases are driven by new store openings. Furthermore, the changing structure of the Chinese economy has closed many factories where white broiler meat was widely consumed in the workers canteens.  In the long term, Post believes white broiler meat will enjoy a larger market share over the domestic yellow-feathered variety because of its cost advantage, the lower feed to meat ratio, customized cuts, more advanced technology investments by the white broiler meat industry, and new marketing efforts to try to reach families directly. 

Imports

Post forecasts 2016 broiler meat imports at 200 thousand tons, 7% down from USDA’s 2015 official figure.  This reduction is largely attributed to the ban on U.S. imports over HPAI detections. Imports from South American countries will continue to benefit from the ban on U.S. poultry and poultry products.

Policy The U.S. exported approximately $300 million in poultry meat and poultry products to China in 2014. However on January 9, 2015, China banned imports of U.S. poultry and poultry related products because of high pathogenic avian influenza (HPAI) detections in the United States. In response, the USDA sought exemptions for heat treated poultry products, such as chicken paws and rendered meals. Discussions with the Chinese government resulted in the lifting of the ban on U.S. poultry meal and feather meal for use as feed ingredients in China’s livestock production. In accordance with accepted science and international standards, heat treatment of certain duration and temperature is sufficient to ensure destruction of any virus. Prior to the detection of HPAI in the United States, China maintained suspensions of U.S. poultry meat and poultry product imports from five states, due to low-pathogenic avian influenza. This policy is inconsistent with the World Organization for Animal Health (OIE) guidelines, which do not recommend trade suspensions due to low pathogenicity avian Influenza detections.

Exports

Post forecasts China’s 2016 broiler meat exports at 430,000 tons, no change from USDA’s 2015 official estimates. Exports to Japan, China’s main export destination, are expected to continue to decline as lingering food safety concerns have caused Japanese buyers to seek other sources for poultry, such as Thailand. Japan and Hong Kong are the main export destinations for China’s poultry products. China mainly exports cooked/preserved broiler meat products. Although exports are expected to remain flat in the near term, China’s skilled workers and some state-of-the art facilities give it a competitive advantage in regional markets such as Japan and Hong Kong.

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