The USDA-FAS GAIN Report CH2023-0112, released on August 24th, quantifies chicken meat production for the current and proximal years. In 2023, domestic production comprising white-feathered broilers, traditional yellow birds and hybrids will attain 14.30 million metric tons. In 2024, production will decline by 3.0 percent to 13.87 million metric tons. In 2024, imports will increase by 2.6 percent from 2023 to 770,000 metric tons. Taking into account exports of 530,000 metric tons, net imports will amount to 240,000 metric tons equivalent to 1.7 percent of projected production. Availability of 14.11 million metric tons corresponds to a per capita consumption of 9.7 kg. (21.3 pounds) based on a population of 1.45 billion.
Chicken production in China is divided among conventional white-feathered broilers for QSR servings and consumers purchasing processed chicken in supermarkets through a cold chain. This segment will decline in volume in 2024 since there is a shortage of parent level breeding stock. This is a self-inflicted wound since government policy has discriminated against primary breeders in the E.U. and the U.S. who will not supply great-grandparent level stock that would enable China to become self-sufficient and to emerge as a competitor within a number of years, China has been attempting to reverse-engineer breeding stock and has purchased pure lines from a second-ranked breeder. In addition to discriminating against major breeders, China has also imposed unjust restrictions on importation of grandparent-level chicks on the flimsy justification of avian influenza. Primary breeders have established breeding facilities certified as “compartments” according to the standards of the World Organization for Animal Health. Primary breeders have also established facilities in nations such as New Zealand that are free of avian influenza. As a result of shortages in available parent level breeders, franchisees of the major breeders have implemented production programs including molting and extending production cycles.
Consumption of yellow-feathered broiler strains has declined based on urbanization favoring purchase of chicken in supermarkets and concurrent closing of wet markets, especially since the advent of COVID. A variety of hybrids have been developed with combinations of traditional yellow-feathered and imported white-feathered broiler strains. Obviously, the varieties of “817” broilers have feed conversion efficiency and growth rates inferior to white-feathered broilers. With an escalation in feed costs, production of traditional, yellow-feathered birds and hybrids is less profitable than white-feathered birds. Notwithstanding the inherent efficiency of conventional broilers, it is noted that Cargill, Inc. has divested broiler production operations and Tyson Foods is attempting to sell facilities and withdraw from production in China.
Pork is the predominant animal protein with a per capita consumption of 39 kg. representing 60 percent of all animal protein in contrast to consumption of chicken at 9.7 kg. per capita,. For the period January 2022 through July 2023, the average chicken meat price ranged from $1.25/lb. to a peak of $1.65/lb. in late 2022. At this time, pork averaged $2.69/lb., approximately 1.6 times the value of chicken. At the present time, pork and chicken are equivalent in price reflecting restoration of pork production following control of African swine fever.
During the first six months of 2023, Brazil supplied 64 percent of broiler products imported by China. The United States was second in volume with 17 percent followed by Thailand (7 percent), Russia (6 percent) and Argentina (4 percent).
During the first half of 2023, U.S. exports of all broiler products to China were 13.2 percent lower by volume to 358,418 metric tons and 29.5 percent lower by value at $401.3 million compared to the corresponding six months of 2022. Volume represented 13.2 percent and value 16.8 percent respectively of U.S. exports during the period. The average price of all products was $1,638 per metric ton compared to the average price of all exports excluding China of $1,234, demonstrating the weighting of the unit value of feet.
F
or the first six months of 2023, chicken paws imported by China declined by 12 percent to 670,000 metric tons. Over the period, the United States supplied 23 percent, Brazil 30 percent, Russia and Belarus combined 27 percent and other nations 20 percent. Paws and feet are subject to further processing on arrival in China including pickling, flavoring and even deboning to produce snack foods. Over January to June 2023, paws and feet represented 66 percent of the total volume of 244,982 metric tons shipped. This was 32 percent less than the quantity shipped during the first half of 2022 with a decline in unit price of 11.5 percent from $2,040 per metric ton to $1,804 per metric ton in 2023.
China imposed retaliatory Section 301 tariffs on U. S. chicken products with an exclusion allowed during February 2020 by the State Council Tariff Commission. Importers of chicken products apply for tariff exclusions approved on a case-by-case basis.
The question arises as to the long-term stability of China as a market for U.S. broiler products. There will be a demand for feet and low-priced edible giblets but in competition with Brazil. Prospects for other products appear less promising given mutual geopolitical competition, freight rates and the differential in FOB cost with competitors.