As an economic game of chicken heats up between China and the U.S., poultry experts are crying foul at China’s decision to levy tariffs of up to 105 percent on American poultry imports.
China’s decision could have serious economic consequences for local processors and farmers.
James Sumner, president of the USA Poultry and Egg Export Council, said the Chinese decision could pluck 650,000 metric tons of poultry parts worth $900 million out of the Chinese market, affecting “the net profitability of virtually all U.S. chicken producers.”
China targeted the chicken industry after having its feathers ruffled by previous U.S. trade measures against Chinese tire manufacturers, among others, experts say.
“Regrettably, our industry has become the scapegoat and is bearing the brunt of China’s retaliation against the U.S. in an unrelated trade dispute,” Sumner said.
In the 2007 U.S. Census of Agriculture, there were 2,170 broiler-chicken farms in Georgia and 959 in Tennessee.
U.S. Rep. Tom Graves, a Republican from Georgia’s poultry-heavy 9th District, said China’s duty hike was in response to a House vote for legislation allowing the U.S. Department of Commerce to factor in China’s currency manipulation when deciding on its own set of tariffs on Chinese products.
“It is no secret that China suppresses the value of its currency and, while this practice must end, I voted against the legislation passed in the House last week because I felt it could lead to an unnecessary tariff battle,” Graves said.
He said China “is watching it closely and will rapidly retaliate” if the Senate also approves the bill.
If the new Chinese duties are not repealed, U.S. exporters would have to pay an additional $73 million to the Chinese government for a reduced annual shipment of 80,000 metric tons of poultry to the country, costing the U.S. broiler industry $973 million, according to Sumner.
About 17 percent of the poultry produced in the U.S. is exported, according to Mike Lacy, professor and department head at the University of Georgia’s poultry science department, making chicken one of the few bright spots in the U.S. export industry.
“The basic laws of supply and demand mean that now there’s going to be too much supply and not enough demand, and the poultry companies are going to lose money,” Lacy said.
“What that means for poultry farmers is that, in the near term, they will end up having to cut back, produce fewer birds, which means less money for American poultry farmers,” he said.
The main bone of contention between China and the U.S. is the large number of chicken feet shipped to Chinese shores from U.S. processors.
Americans don’t have an appetite for chicken feet – also known as paws – but Chinese consumers find them delicious, paying 60 to 80 cents a pound, while the feet fetch only pennies in the U.S.
Without the Chinese market, the paws simply become a byproduct of the chicken processing process with no real customer, experts say.
“There is really only one market for U.S. chicken paws, and that’s China,” said Toby Moore, a spokesman for USA Poultry and Egg Export Council.
Dade County chicken farmer Nadine Woods said she hadn’t heard if the market prices would affect her or other farmers, but she said her processor does ship feet to China.
“They get as much for the feet as they do for the whole chicken,” she said.
The impact will be primarily felt by chicken processors and exporting companies, which essentially have lost the only market for the feet, said Moore, but he added that the industry’s goose is far from cooked.
“Companies have one option if they don’t sell them to China, and that’s to have the feet rendered for protein meals, cattle feed, that kind of thing,” Moore said.
Gary Rhodes, a spokesman for Pilgrim’s Pride, said his company was still “shipping to China,” and that there would be “no impact on jobs,” even though the company was levied with a 53.4 percent fee, according to China’s Commerce Ministry.
Tyson Foods spokesman Gary Mickelson said the company would “do everything we can to continue selling chicken profitably to China, as well as seek ways to expand our poultry exports to alternative markets.”
Tyson, the largest U.S. chicken processor, was assigned a 50.3 percent fee on chicken products imported to China.