converting website visitors

ThePoultrySite.com - news, features, articles and disease information for the poultry industry

USDA International Egg and Poultry


21 August 2013

USDA International Egg and Poultry: EU Ends Export Subsidy on PoultryUSDA International Egg and Poultry: EU Ends Export Subsidy on Poultry

On July 18, the EU Commission decided to suspend export refunds for poultry meat. Commission Implementing Regulation 689/2013 sets all poultry meat export refunds to zero. The commission had been steadily reducing those refunds since 2012, falling from €325 per MT on July 20, 2012 to €217per MT on October 19, 2012, and €108.5per MT on April 19, 2013.
USDA International Egg and Poultry

Export subsidies for other meats like pork and beef had already been reduced to zero; export subsidies for arable crop products were terminated some time ago. It is the first time since the 1970s that the European Union has stopped all export subsidies on agricultural products.

For the past few years, only exports of frozen whole broilers benefited of export refunds, and only to specific countries, i.e., Commonwealth of Independent States (Ukraine, Belarus, Moldova, Russia, Georgia, Armenia, Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan), Angola, Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, United Arab Emirates, Jordan, Yemen, Lebanon, Iraq and Iran.

France is almost the only EU exporter of frozen whole chicken to the above destinations, and these exports represent about 30 percent of the French chicken production. In 2012, France exported 242,000 metric tons of frozen whole chicken valued at $441 million.

Only two French companies are exporting frozen whole broilers. The major one, DOUX, is under receivership after filing for bankruptcy in June 2012. It received € 55 million ($ 71.5 million) in refunds in 2012 out of a € 650 million ($845 million) in total sales and had expected to receive around € 25 million ($ 32.5 million) in refunds in 2013.

The other company, Tilly Sabco, is much more dependent on export refunds, having received € 19 million ($ 24.7 million) of EU support in 2012 out of € 136 million ($ 177 million) in total sales. Tilly Sabco had planned to receive € 4 million ($ 5.2 million) of EU refunds in 2013.

The Commission’s decision generated an outcry in the French poultry meat sector, with the main French farmers’ union (FNSEA) calling on to the French President to force the Commission to reverse its decision. Both Ministers of Agriculture Stéphane Le Foll and Minister for Food Industry Guillame Garot criticized the decision. According to the Ministry, 10 Member States sided with France against the removal of the refunds, with only 12 supporting it. However, privately, most poultry experts and some officials acknowledge that the French position was unsustainable with only two companies benefiting from the EU refunds.

The Commission’s recent decision means that DOUX will probably need to reduce its annual expenses by at least € 10 million ($13 million), mainly by not renewing purchases contracts with hundreds of farmers who supply the birds. Several slaughterhouses may also be at risk, with more than 2,000 jobs put in jeopardy. To protest the decision, Tilly Sabco has decided to temporarily suspend its operations and announced that it will take the Commission’s decision to court. Experts note, however, that it has little chance of success, since the decision is legal in regards to EU rules.

In the longer term, poultry analysts believe the impact of the end of export refunds is somewhat exaggerated. The halving of those refunds in 2012 did not impact French broiler exports to Saudi Arabia or Yemen (and in early 2013 as well) , even though FOB French export prices to Saudi Arabia went up from $1,616 to $2,211 per metric ton during the period. In the same 12-month period, Brazil FOB export price to Saudi Arabia went from $1,706 to $2,053 per metric ton.

French frozen chicken exports are well suited to Middle Eastern markets, which are looking for small birds (less than 1kilogram, 40 days old at slaughter) which many competitors cannot supply. French exporters have a decades-long relationship with wellestablished importers and distributors to the point that some Saudi chicken importers proposed to support the DOUX Company when it went bankrupt in 2012. So, overall, the end of the EU export refund will not eliminate French frozen chicken exports to the Middle East (a 10 to 15 percent decline should be the maximum) but will certainly further weaken these exporting companies, which are already facing severe financial strain and very low operating margins.

Source: EU market situation for Poultry

The European Commission’s web page for Agriculture and Rural Development noted that the EU is one of the world’s top producers in poultry meat and a net exporter of poultry products. In 2012 poultry meat production reached 12.4 million tons, imports totaled 0.82 million tons, and 1.3 million tons were exported. France is the leading producer of poultry meat, closely followed by UK, Germany and Poland. Combined these four countries account for half of the EU production of poultry meat.

The EU imports high value products, mainly from Brazil (70%) and Thailand (20%). The average value of imports is 2.65 EUR/kg. Exports are of lower value (1.40 EUR/kg); half of exports go to five countries: Saudi Arabia, Benin, South Africa, Hong Kong and Russia.

Source: USDA GAIN Reports FR9143 and E80036; European Commission, Agriculture and rural development; news items

DOWNLOAD REPORT:- Download this report here

Our Sponsors

Partners


Seasonal Picks

Poultry Breeds and Management