What are the Prospects for Canada's Poultry Industry?
CANADA - Canada's poultry industry is expected to grow substantially in 2015 compared to 2014, and then return to a more moderate growth rate for 2016, according to a report from the USDA's Foreign Agricultural Service.
20 August 2015
3 minute read
By: The report forecasts a return to slower growth for 2016, with broiler meat production estimated at 1,130,000 metric tons (MT), or nearly 2 per cent above the 2015 estimated level.
Poultry meat will continue to be competitively priced and an attractive substitute to the pricier beef. With supply management, poultry farmers in Canada recover their costs of production from processing plants.
Farmers are, therefore, largely sheltered from the impact of fluctuating feed costs. Although poultry processors' ability to pass on input costs to downstream customers is more limited, in 2016 they are likely to continue to enjoy above average profit margins.
For 2015, the report estimates broiler meat production at 1,110,000 MT, a level reflecting an improved performance in the sector compared to previous years, as the industry steadily increased production throughout the year to meet a solid demand.
As such, the 2015 broiler meat production is estimated to be almost 3.5 per cent larger than in 2014, a growth rate not encountered since the mid-2000s.
Canadian imports of chicken meat are regulated under a tariff rate quota (TRQ) which is a function of the previous year's production level. The global quota for 2016 is projected at 83,000 MT. In 2015 the TRQ level is 80,500 MT.
Canadian poultry companies have been increasingly utilising various government administered imports for re-export programs (IREP). Through IREP, Canadian chicken processors import chicken meat duty free for use in processing, provided they re-export the associated processed products.
Since 2007, imports for re-export have exceeded the TRQ volume, and therefore total chicken imports are more than double the TRQ volume.
The IREP offered by the Canada Border Services Agency (CBSA), called the Duties Relief Program (DRP), continued to increase in popularity among Canadian companies.
The report anticipates that in 2016 over 85 per cent of Canada's imports for re-export will be part of CBSA's program, as opposed to the traditional IREP administered by the Department of Foreign Affairs, Trade and Development (DFATD).
