Canada

After Russia, Canada is the second most important export market for United States (U.S.) poultry meat. U.S. poultry meat exports to Canada in 2004 reached a record of $332 million, 15% of total U.S. poultry meat exports to the world. Almost 60% of U.S. chicken exports to Canada in the first six months of 2005 originated from Alabama, Georgia and Florida with Mississippi accounting for only 2.5% and Louisiana for about 5%. Hurricane Katrina, which struck Mississippi affecting 80% of its chicken slaughter plants and parts of Louisiana, did not sharply impact U.S. exports to Canada.

Traditionally, Canada has sourced virtually all of its imported chicken from the United States. The situation changed when Canada approved Brazil’s meat inspection system in July, 2002 allowing imports of Brazilian chicken. In 2003 Canada imported a small amount of chicken from Brazil. In 2004, due to tight supplies of chicken because of avian influenza (AI) problems in British Columbia, Canada imported from Brazil 20,000 metric tons of chicken representing 22% of Canadian imports. The Brazilian chicken imports consisted of frozen wings and frozen boneless skinless breasts for the foodservice market in the heavily populated provinces of Quebec and Ontario.

Canadian chicken imports from Brazil have declined 25% in the first six months of 2005 from the same period last year. Meanwhile, imports of cooked chicken from Thailand have risen 78% from January – June, 2005 when compared to the same time frame last year. The Brazilian exports in 2004 occurred even though Canada had issued supplementary import permits to British Columbia processors and purveyors to allow record U.S. import levels of chicken to cover the shortfall. The increased U.S. imports, more than 8,000 MT, consisted mostly of whole chickens. As a result, the increased chicken imports from Brazil appeared to have no direct correlation with the shortages brought on by the AI crisis. The development in 2004 marked the first time U.S. chicken exporters had serious competition for the Canadian import market.

Current U.S. animal health regulations prohibit the import of Brazilian chicken into the U.S., even cooked product. To ensure Brazilian product imported into Canada does not enter the U.S., the Canadian Food Inspection Agency and the Animal and Plant Health Inspection Service deemed that Canadian registered slaughtering or processing establishments are ineligible to export raw poultry meat products to the U.S.

Despite the AI problems in 2004, Canadian chicken production reached 946,125 metric tons (MT), almost 2% above the 2003 level. For January-June, 2005 chicken production is almost 7% above the same time frame in 2004 and is anticipated to be up 5-6% over last year’s by year end. In 2006 chicken production is forecast to increase another 1-2%. The AI situation affected turkey production in 2004 resulting in a 3% decline in production. Canadian turkey production for the first 7.50 months of 2005 has risen nearly 10% over the same period a year ago reflecting a higher target set by the Canadian Turkey Marketing Agency. In 2006, turkey production is predicted to show little change from 2005.

For both chicken and turkey, even though administrative arrangements for the establishment of export programs may vary from one province to another, the objective is to facilitate exports in a manner that does not disrupt the domestic market. Quota allocation for export is limited to 8% of a province's domestic allocation. Processors must sign a commitment that an amount equivalent to their export allocation will be exported. If the volume is not all exported, the volume remaining on the domestic market is subject to a $0.44 per kilogram fine. Global access to Canada’s chicken market is determined by a NAFTA (North America Free Trade Agreement) formula of 7.5% the previous year’s Canadian chicken production as published by Statistics Canada. Similarly, access to Canada’s turkey market is determined by a NAFTA formula of 3.5% of the targeted turkey production announced by the Canadian Turkey Marketing Agency. For 2005, Canada’s chicken tariff rate quota (TRQ) is 72,538 MT with an over access duty of 238%-249%. Turkey’s over access tariff ranges 154- 165%. However, NAFTA allows a supplementary import system for chicken and turkey that allows additional imports at zero duty when supplies fail to meet market demand.

Canada also allows special imports of chicken at duty free rates for processors who manufacture products for re-export and to processors who manufacture products not subject to a TRQ. Total chicken imports from all sources reached a record 100,000 MT during 2004. Almost one-third of the total was classified under the “import to export program” mentioned above.

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Source: USDA's Agricultural Marketing Service - 4th October 2005