BEIJING/SAO PAULO: China has launched an antidumping investigation into imports of Brazilian broiler chicken in another blow for the South American country’s meat industry and threatening more than $1bn of exports annually.
The investigation comes after a complaint from China’s domestic industry that Brazil, its top chicken supplier, has been selling its broilers below market value. Any move to penalise imports would hurt Brazil’s protein industry which has already been tarnished in 2017 by a food safety scandal.
Between 2013 and 2016 Brazil accounted for more than 50% of broiler product supplies to China, the world’s second-largest poultry consumer, China’s commerce ministry said.
It accounted for almost 85% of frozen chicken imports — almost 600,000 tonnes valued at as much as $1.23bn, according to Chinese customs data.
“The announcement of the investigation itself works like a barrier because the potential imposition of antidumping charges could constrain Chinese importers,” said Vera Kanas, a lawyer specialising in foreign trade disputes.
“They will not want to close purchases knowing that charges may apply later,” she said.
The antidumping investigation involved 27 Brazilian firms including BRF SA, JBS SA and several privately owned exporters, Kanas said.
The Chinese government should make a final decision in a year, but a preliminary ruling could be unveiled as early as April 2018, according to the case documents and Chinese law, Kanas said.
BRF declined to comment. JBS referred queries to ABPA, a group representing Brazilian chicken producers.
Brazil replaced the US as China’s top chicken supplier after Beijing slapped antidumping duties on US broiler chicken products in 2010.
ABPA denied its members sold products below market prices. “We are very competitive and it is hard for the Chinese producer to understand,” ABPA president Francisco Turra said, reflecting on the surge of imports since the Chinese market opened to Brazilian poultry in 2009.
“Such complaints are normal and we can defend ourselves.”
The investigation comes just months after Beijing slapped hefty penalties on sugar imports from top growers such as Brazil and Thailand after lobbying by domestic mills.
Brazil’s foreign ministry said the government would support chicken exporters involved in the investigation.
Shares of BRF, the world’s largest chicken exporter, initially fell on Friday but closed up 1.29% as the benchmark Bovespa stock index gained 1%. JBS shares ended down 2.04%.
China relies on imports for its supply of white-feather broiler chickens, which are favoured by fast-food chains such as KFC and McDonald’s for their more rapid development and plumper meat. Yellow-feathered birds, which are native to China, are generally sold at retail.
The push for a probe comes as the poultry industry recovers from an outbreak of bird flu and struggles with falling demand.
“The chicken market has been not so good since the second half of last year. Brazil is selling a lot to China at a cheap price while China has ample supplies itself,” said a chicken farmer in northern China who gave his surname as Tan.
Live broiler chicken prices in Shandong province, one of the main producing areas, have more than doubled since February and were around 7.7 yuan (R15.18) per kg on Friday.
Any curb on imports would probably boost domestic prices further, potentially denting demand for chicken as a cheap alternative to pork, the nation’s favorite meat. Broiler meat sells for 14 yuan ($2.10) per kg, according to government data, almost one-third less than pork and more than 70% cheaper than beef and lamb.
