China

Despite domestic production increases, China’s paw supply lags far behind consumer demand. As a result of the active consumer demand, imports account for 40% or more of China’s total poultry imports (approximately 300,000-350,000 metric tons (MT) annually). In 2006 chicken paw and wing tip/edible offal imports accounted for 40% of total poultry imports to Mainland China and 44% of total poultry imports to Hong Kong. As more processing plants are approved to export frozen poultry to China and additional measures are taken to eliminate gray channels, it is expected a greater percentage will be shipped directly to Mainland Chinese ports. For example, previously chicken paws could be exported to Hong Kong, certified “not fit for human consumption” and avoid testing procedures. Now, the standards between China and Hong Kong have been unified reducing any advantage in sending product to Hong Kong.

During 2006, the United Sates (U.S. ) chicken paw export volume to China and Hong Kong was 156,974 MT, or 40% of the total U.S. frozen chicken cuts and edible offal (HS code 020714) destined for China. The U.S. is the largest supplier of chicken paws to the Chinese market. In December, 2006 China was the top importer of U.S. chicken meat and paws. However, problems exist in growing the U.S.’s market share. Until recently the USDA did not inspect chicken feet and paws. In the fall of 2001 China refused to import chicken paws not baring the USDA mark of inspection. As a result of the regulatory changes to meet China’s requirements, many U.S. processors decreased or shut down paw production while others invested in plant upgrades.

With the strong U.S. poultry exports in recent years the U.S. has been able to recapture lost market share from China’s poultry ban in 2003 due to reports of avian influenza. U.S. market share fell from 96% in 2003 to 46% in 2005. During this same time Brazilian and Argentine exports increased 600 and 900% resulting in Brazil and Argentine becoming the U.S.’s main competitors. Even though the majority Brazilian paws may be finding their way into China through unofficial channels, some feel up to 24 plants in Brazil could be approved to export to China in 2007. Although U.S. paw quality is considered generally high, issues like moisture content, packaging and limited available volume have made traders interested in buying paws from other countries even with recent improvements in quality. Other countries exporting to China include Chile, EU, Iran and Turkey.

Exports

Even though overall poultry consumption may be growing in China and imports and domestic production are increasing to satisfy their needs, China is also looking to expand their exports. China has been trying to export chicken to the U.S. for several years. Chicken imports from China were stopped several years ago after 14 people died from Avian Influenza. No chicken meat has been imported from China in the last 7 years. In the past when chicken has been imported from China it has been used in items such as chicken salad.

As a result of avian influenza in China, it is anticipated China will try to exports of fully cooked products to high income countries. Effective May 24, 2006 China was allowed by the Food Safety Inspection Service (FSIS) to export processed and shelf stable poultry to the U.S. that has been produced from slaughtered poultry in FSIS inspected establishments or slaughtered in other countries eligible to export poultry to the U.S. As of February 9, 2007 there have been no plants approved to export to the U.S. However, currently the U.S. does import egg products from China. Some are anticipating the USDA to continue to loosen restrictions on China’s chicken exports of cooked poultry. If the rules are relaxed more, it may benefit U.S. companies who have facilities in Mainland China.

Concerns, meanwhile, have been raised about current or proposed rules concerning imports of poultry from China. Some of the concerns relate to the ability of the U.S. to guarantee Chinese processing facilities from mixing Chinese poultry with U.S. poultry and the fact USDA inspectors have previous found problems with China’s food inspection system. Meanwhile, China’s Department of Health and the Council of Agriculture started inspecting underground poultry slaughter houses and traders that reportedly use asphalt to remove duck feathers.

Even though China’s domestic food processing industry is growing fast, China still wants to encourage exporters to emphasize quality in order to be competitive in international markets. The first group of Chinese cooked poultry processors, after being accredited by HACCP and having a 100% passing rate for inspections for 3 years in a row, are being allowed to export free of inspections for a period of 2 years under a new certificate in a move to encourage quality.

Egg production has been recovering in China in 2006 after a reduction caused by avian influenza. During the first nine months of 2006 China produced 20.39 million metric tons of eggs, 7.5% increase on year on year growth. China also exported 937 million eggs during the first 9 months of 2006, an approximate 2.16% increase on year on year. The U.S. imported no table eggs from China in 2006.

Import Commodity Reporting System

China’s Ministry of Commerce in a recent press release announced intentions to establish an import reporting system. The system would be loosely based on USDA’s Export Reporting system and would initially apply to certain soy products. Some of the key differences in China’s proposal are the additional reporting requirements after the contact has been completed, the sever penalties involved, and the suggestion the system may have role beyond passive information dissemination. The Ministry of Commerce believes the system will have no trade impact and is WTO compliant.

Source: USDA/FAS and various news sources

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ThePoultrySite News Desk