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Indian Poultry Industry Cautions Government over WTO Order

15 June 2015

INDIA - After India lost a World Trade Organisation (WTO) battle against the US for unfairly blocking imports of US poultry and eggs, the Indian poultry industry has cautioned the Indian government on the impact on the domestic poultry sector.

ThePoultrySite tried to gauge the opinion of industry decision makers on how it will impact the sector.

Speaking on this issue with ThePoultrySite, Amit Saraogi, chairman of the Compound Feed Manufacturers Association (CLFMA) of India said: “Government should appeal against the order or needs to do something on this; if we start getting cheaper chicken legs, the domestic poultry industry will be destroyed.”

On asking why he felt that the industry will be destroyed, Mr Saraogi said: “The cost of one processed chicken to domestic companies is around $3 per chicken, but it is just $1 per chicken for US companies, so if they are entering in this rates, you can see the impact.”

The World Trade Organisation recently upheld a ruling that India was unfairly blocking imports of US poultry and eggs.

Under WTO rules, India will be given a period of time to dismantle the trade barriers that have been found to be illegal. If it fails to dismantle the barriers, the US would have the right to impose trade sanctions against India equal to the amount of lost agricultural trade.

The US poultry industry has estimated that exports of poultry meat alone could exceed $300 million annually once India’s restrictions are removed. Currently, the US exports 20 per cent of its poultry meat production each year.

The US intends to export chicken legs, which are in high demand in India. Legs are treated as waste in the US along with chicken beak and other parts, whilst chicken legs are sold at a premium in India.

Mr Saraogi said the share of chicken legs is around 40 per cent of the $9.37 billion (Rs 60,000 crore) Indian market. He also said that the quality of the chicken legs from the US is not good, asserting that American exporters keep the legs for months, before they export them to other countries.

"Though the order will impact us in the next 18 months, this will create havoc in the sector. We strongly demand government to take action on this, otherwise the poultry industry will face huge impact," Mr Sarogi added.

"Poultry industry associations and federations should come together and make a presentation to the central government on how the WTO order will impact on the sector,” an Aviagen India official told ThePoultrySite.

However, Sundararajan G B, managing director of Sugana Foods said: “We don't see immediate impacts on the sector; it will take ten years to impact. This will open the cost competitiveness in the sector and there is no need for us to worry.

“I feel the market is mature enough to compete with the US companies."

When asked about dumping of chicken legs, Sundararajan G B said that his company deals in whole chicken, so imports of legs alone will not be a concern to them. He added that the government will also add 100 per cent tax on these imports from the US.

The US had dragged India to the WTO on 6 March 2012 saying that India imposed the trade barriers in 2007 to prevent avian influenza from entering the country.

India’s Ministry of Commerce and Industry had informed the dispute settlement body that the primary reason for restricting the entry of various agricultural products from the US was because of concerns about the spread of the avian influenza, but the WTO ruled that these restrictions were not equally applied to other countries affected by the disease, and that they were not backed up by the relevant scientific evidence.

The European Union, Australia, China, Japan, Colombia, Ecuador, Guatemala, Vietnam, Argentina and Brazil subsequently joined as third parties in the dispute.

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Jagdish Kumar, Editor

Jagdish Kumar, Editor

Top image via Shutterstock

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