China imposes anti-dumping penalties on Brazil chicken products

CHINA – China has announced plans to impose anti-dumping duties on broiler chicken products imported from Brazil citing an investigation that indicated increasing imports were damaging the domestic poultry industry.

Bloomberg reported that the Ministry of Commerce said that importers would now have to pay deposits of between 18.8 to 38.4% on purchases to Chinese Customs effective 9 June 2018.

The move would affect products produced from Brazil’s leading poultry product producers JBS S.A. and BRF S.A.

According to a list published by the ministry, supplies from BRF SA are subject to a 25.3% rate and an 18.8% duty will be imposed on goods from JBS SA subsidiaries.

Though Brazil is the country’s top supplier of poultry products, the tariffs will reduce exports from Brazil and may lead to more U.S. imports once China and the Trump administration improve trade relations, according to Kong Pingtao, general manager at Beijing Pro-Agri Communication Co.

To ease trade tension between the two countries, China lifted extra duties on U.S. chicken imports, although shipments are still banned amid bird-flu concerns.

In the meantime, Brazil poultry producers are mulling price agreement with China and has also filed a complaint at the World Trade Organization (WTO), reports Bloomberg.

BRF SA has been struggling to operate profitably following losses attributed to difficult trading environment and trade bans imposed by Russia and Europe.

In the quarterly results, it posted a weak start with US$32 million in losses, net revenue falling 7.8% from US$2.5 billion.

Brazil’s benchmark Ibovespa index showed BRF fell 7.5% in Sao Paulo while JBS rose 4.1%.

The decision stirred protests from the Brazilian Association of Animal Proteins (ABPA) which argued that there was no causal link between Brazilian poultry exports and possible local market situations.

In 2017, Brazil exported to China 391,400 tons of chicken meat which represents 9.2% of all chicken meat exports from Brazil that year.

Meat export losses

Brazil reported export losses in the country’s poultry and pork industries reached US$40 million as a result of an anticorruption probe targeting Brazilian meat packers.

The investigation saw import bans from China, Hong Kong, Egypt, Mexico and Chile on Brazilian meat though most of them were later lifted.

China, Brazil’s largest trading partner, and South Korea moved to suspend imports of meat from Brazil as the fallout continued.

ABPA said the bans represented 20% of revenue generated by chicken exports, 33% of international pork sales and 14% of shipments of turkey meat.

However, South Korea recently moved to accept pork products from four pork processors in Brazil after the country was declared free of foot-and-mouth disease.

South Korea was the world’s third largest importer of the product, behind only Japan and China, with import of 489.5 tons valued at US$1.53 billion in 2017, according to the Ministry of Agriculture, Livestock and Farming, Brazil.

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