Jun 12, 2018

China Claims Anti-Dumping against Brazilian Poultry Exports

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Poultry producers in southern Brazil now have another obstacle to overcome. After a disastrous truck driver strike that resulted in billions of loses, China has now decided to levy an antidumping tax of 18.8% to 38.4% on Brazilian poultry products depending on the company.

China started its alleged dumping investigation last August and they have concluded that Brazilian companies are selling their poultry products at below the cost of production. China had been charging a 10% tariff on Brazilian poultry and that will now increase to 18.8% for products from Seara, 20.8% for products from Aurora, 25.3% for products from BRF (the largest poultry exporter in Brazil and the world), and 38.4% for products from C. Vale.

The director of the Poultry Producers of Santa Catarina (Acav), Ricardo Gouvea, indicated that Brazil sells its poultry products for essentially the same price to everyone - more than 150 countries. The Brazilian Animal Protein Association (ABPA) agrees and in meetings with Chinese officials, the Brazilian officials reiterated that the dumping charge was false and they point to two import facts.

They feel the difference in the level of taxation depending on the company indicates that the real reason for the Chinese action is to simply reduce poultry imports. They also point out that some of the companies involved in the claim do not even export poultry to China.

If these taxes remain in place, the state of Santa Catarina, which is the second largest poultry exporter after Parana, appears to be the state most impacted. In the state of Santa Catarina, poultry is the number one export. Last year, poultry accounted for 23% of the state's ag exports and it represented an increase of 12.8% over the previous year.

The Brazilian Animal Protein Association (ABPA) indicated that 9.2% of Brazil's poultry exports go to China and that 5% of the poultry market in China is Brazilian products. Last year, China imported 391,400 tons of Brazilian poultry products.

Thus far in 2018, the poultry sector in the state has been operating in the red. From January through May, poultry export receipts in Santa Catarina have declined 6.25%. In addition to the losses caused by the trucker strike, poultry producers have been paying higher prices for their feed ingredients namely corn and soybean meal.

Acav has urged the Brazilian government to quickly respond to the Chinese claim because the Brazilian meat sector is undergoing a "rough patch". They have recently confronted a poultry embargo from the European Union, there have been questions from Arab countries on how the chickens are killed, Russia has embargoed pork products from Brazil, and the sector is still calculating the losses from the recent truck driver strike.

ABPA and the Brazilian government prefers a negotiated settlement to the dispute instead of taking the dispute to the World Trade Association where Brazil has a recent history of successful outcomes.