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EU poultry exports increasingly focused on Africa

04 November 2012

The USDA annual review of the EU poultry sector, published in September 2012, suggests that further growth is expected in the sector in 2012 and 2013. Broiler meat consumption has been less affected by the economic downturn than other meats, although ‘sales of cheaper cuts (legs and wings)… increased faster than sales of more expensive parts (breasts and sales of whole birds)’. The sharp rise in global grain prices is also likely to impact on EU poultry production costs, with the economic downturn making it difficult for producers to pass on these increased costs to consumers.

The EU broiler meat sector has enjoyed increased export opportunities, with exports expected to grow a further 4.5% in 2012 and 3% in 2013 (for more details on recent trends in EU poultry exports see Agritrade article ‘ EU 2011 annual review shows growing EU poultry exports’, 20 May 2012). According to USDA, this ‘is driven by booming exports of low-priced cuts and mechanically deboned meat to Western and Southern Africa, particularly South Africa and Ghana’. The report notes that ‘South Africa is becoming the largest customer of EU-27 broiler meat’. ‘French turkey exports to Western and Southern Africa are expected to remain stable’.

EU exporters are, however, facing increased competition from Brazilian suppliers on West African and Southern Africa poultry-meat markets (see Agritrade article ‘ Strong growth in Brazilian poultry exports to Africa, 29 July 2012). This is limiting the scope for exporters to pass on increased feed costs to overseas buyers.

Competition on local ACP markets from imported poultry meat is reportedly affecting employment. Job losses announced in September 2012 by Astral Foods, South Africa’s second largest poultry producer, were attributed to record high grain prices and ‘the increasing prevalence of cheaper bird imports’. According to Astral Foods, ‘poultry imports to South Africa are at a record [level]’, despite the imposition of ‘additional import tariffs of as much as 63% on certain cuts of chicken from Brazil’. The additional South African tariffs are now the subject of a dispute settlement action at the WTO (see Agritrade article ‘ US urged to join Brazilian WTO challenge to South African poultry tariffs’, 13 August 2012).

EU exports have also been helped by Russia’s accession to the WTO and by increased EU exports to Ukraine and Yemen, which have more than compensated for lower exports to Saudi Arabia, Hong Kong, China and Vietnam. The bankruptcy of the French poultry company Doux is however likely to impact on export levels in 2012.

The EU’s trade surplus in broiler meat is expected to increase in 2012 and 2013 in the face of stable imports (the largest suppliers are Brazil and Thailand) and surging exports. This is despite the reopening of the EU market to Thai exports of uncooked poultry meat, which is expected to impact adversely on imports from Brazil, but which is expected to have little effect on overall EU27 import levels.

It should be noted that only small volumes of poultry-meat imports into the EU27 region take place outside tariff-rate quota arrangements, as often these imports are undertaken by companies to build up a track record of imports in order to establish eligibility to participate in quota allocations in subsequent years. 

Editorial comment

Western and Southern African markets are gaining in importance as destinations for EU poultry exports, with competition between EU and Brazilian poultry exporters intensifying. This could well leave local poultry producers ‘between a rock and a hard place’, regardless of the poultry production systems in operation locally.

Against this background, the EU’s use of tariff-rate quotas to manage the poultry trade in ways that meet growing consumer demand, while continuing to nurture local poultry production, could potentially hold important lessons for ACP governments grappling with the trade challenges posed by escalating import bills and the demands of local poultry producers.

However, transparency of management of import licensing arrangements and consistency with regional trade policy commitments are critical elements of any managed trade regime in the poultry sector. Managed trade regimes also need to be closely aligned with measures to get to grips with underlying challenges related to securing competitively priced feed supplies and improving animal disease control, in order to enhance overall poultry sector productivity.

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