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US, China May Reopen Chicken Trade | KTIC Radio

US, China May Reopen Chicken Trade

US, China May Reopen Chicken Trade
Baris Karadeniz/iStock/Thinkstock

(Dow Jones) — U.S. and Chinese trade officials are in talks to reopen China’s market to U.S. chicken exports as they seek to forge a new trade deal, according to people familiar with the discussions.

The negotiations are part of efforts to resolve broader U.S.-China trade disputes over market access, intellectual-property protections and other matters, according to the people.

If the talks are successful, U.S. meat giants like Sanderson Farms Inc., Pilgrim’s Pride Corp. and Tyson Foods Inc. could begin clawing back some of the business in China, a key market that represented hundreds of millions of dollars in annual sales before a ban was implemented in 2015 in response to an outbreak of avian flu in the U.S.

China’s immense appetite for chicken feet, along with dark meat and other products less popular among Western consumers, has made the loss of that market particularly painful for chicken processors.

“We are both hopeful and optimistic that this issue will be resolved in the not-too-distant future,” said Jim Sumner, president of the U.S. Poultry & Egg Export Council. The Georgia-based industry group promotes U.S. chicken products overseas and has been providing input to U.S. and Chinese officials during the trade talks, Mr. Sumner said.

The U.S. Agriculture Department recently informed the American meat industry that chicken products are currently being discussed as part of the trade negotiations with Beijing, the people with knowledge of the matter said. Top issues for U.S. poultry companies include China’s import quotas and technical standards, they said.

China for years has been the biggest global market for chicken feet, which are called paws in the U.S. meat industry and “phoenix claws” among Chinese diners. The products are sauteed, stewed and spiced for sale in high-end restaurants and street-corner food carts.

Over the past decade U.S. chicken processors have shipped hundreds of thousands of metric tons of chicken feet to China. But that has dropped to near zero since January 2015, when China banned U.S. chicken products amid an outbreak of avian influenza in the U.S. Midwest that required tens of millions of birds to be culled from turkey and chicken farms. While other countries have lifted their bans, China’s has remained, and the country last year levied tariffs on U.S. poultry products, including those already prohibited, in retaliation for U.S. duties imposed on Chinese goods.

China’s block on U.S. poultry has been costly for chicken companies. In 2017, U.S. meat companies shipped $1.3 million worth of chicken meat to Chinese buyers, compared with $248 million in 2014, according to USDA data.

In China, chicken feet can fetch around $1 a pound, and business is brisk in dark meat like leg quarters that are less popular in the U.S. Without China’s purchases, many U.S. chicken companies have instead sent their chicken feet to rendering plants making pet-food ingredients, often getting around only a few cents a pound.

“China would bring in $50 million to $60 million, pretax, for us,” Sanderson Farms Chief Executive Joe Sanderson said at a November investor event.

In the U.S., chicken processors are struggling against low prices brought on by record poultry and pork production, along with high beef supplies. Cheap meat has ramped up competition in grocery-store cases and on restaurant menus, and for much of 2018 chicken lost market share to low-price hamburgers and ground beef.

A record 42.8 million pounds of chicken meat is projected to be produced this year, the USDA projected in late 2018.

An accord on chicken could also help China’s meat industry, which is grappling with African swine fever, a disease deadly to hogs, but not harmful to humans. The malady struck hog barns across most of China’s provinces starting in late summer, and continued outbreaks have forced the culling of more than 900,000 hogs, according to Chinese government estimates.

While pork remains by far China’s most-consumed protein, U.S. meat industry officials see the chance for chicken to fill any gap left by constrained pork production. Mr. Sumner said nearly 700 Chinese meat traders attended a U.S. Poultry & Egg Export Council function in Suzhou, China, over the past week.

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