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China slaps anti-dumping deposit on Brazilian chicken

China slaps anti-dumping deposit on Brazilian chicken

By Dominique Patton

BEIJING (Reuters) - China will impose temporary anti-dumping measures on imports of Brazilian chicken meat, it said on Friday, at the same time as the United States pressures Beijing to reopen its market to American poultry products.

Chinese importers of Brazilian chicken will be required to pay deposits ranging from 18.8 percent to 38.4 percent of the value of their shipments from June 9, the commerce ministry said in a statement.

A preliminary ruling from the ministry found that Chinese producers had been "substantially damaged" by shipments from Brazil between 2013 and 2016, when the country supplied more than half of China's imports of chicken meat.

The anti-dumping measures are another blow to Brazilian meatpackers, who are still recovering from a food safety scandal last year and a May truckers' protest that forced farms to cull some 70 million chickens due to a lack of feed.

They also show how third-party countries like Brazil, the world's largest chicken exporter, could become collateral damage as the U.S. and China look for ways to head off a trade war.

"We're very, very concerned with those negotiations because what we don't want to see is Brazilian exporters at a disadvantage vis-a-vis other competitors that may also be in a position to export to this country," said a source at the Brazilian embassy in Beijing, who declined to be identified.

Shares of Brazil's BRF SA, the world's biggest chicken exporter, fell 5 percent in early Sao Paulo trading.

Rival JBS SA, whose U.S. poultry unit Pilgrims Pride Corp is larger than its Brazilian division Seara, rose 3.4 percent.

BRF and JBS declined to comment immediately on the matter.

Brazilian protein industry group ABPA denied any causal link between the chicken shipments and any harm to Chinese producers, calling the anti-dumping measures a step backwards in the countries' strong bilateral trade relations.

While the initial result of a probe that started last August had been expected this month, it also comes as the U.S. pushes to recover access to the Chinese poultry market amid ongoing trade talks.

China has agreed to increase its imports of American farm goods in recent negotiations aimed at averting a trade war between the top two trading nations.

About 9 percent of Brazil's chicken exports went to China last year, according to ABPA, which said the flows were likely to be maintained due to strong Chinese demand.

A Brazilian industry source said the Chinese commerce ministry had proposed further negotiations with exporters, including the possibility of setting a floor price for exports to China. It is not yet clear if the industry would accept such a proposal, the source said.

CHICKEN FEET

Brazilian exporters should be able to absorb the impact of the deposits, particularly for chicken feet, which would otherwise have no value, said Pan Chenjun, senior analyst at Rabobank.

"China is not the most important market (for Brazil), but in value it's quite important as it takes all the byproducts," Pan said, adding that importers are likely to negotiate with suppliers to share the deposit fees.

Of the 29 Brazilian companies named by the ministry, deposit rates on products from JBS and Seara Comercio de Alimentos Ltda are 18.8 percent, BRF products have a deposit rate of 25.3 percent, and shipments from C.Vale - Cooperativa Agroindustrial will be charged at 38.4 percent. Imports from all other unspecified producers will also be hit with the highest rate.

Li Jinghui, managing director of the China Poultry Association, declined to comment on the news. An official at the China Animal Agriculture Association also declined to comment.

It is not clear what will happen to shipments already on the way to China. An anti-dumping deposit levied on sorghum from the United States in April caused chaos in the grains trade, with dozens of cargoes stranded as importers tried to resell to other markets to avoid paying the tariffs.

Broiler chicken prices in China have recovered significantly since last year, when they fell to decade-lows after hundreds of people died from contracting the H7N9 bird flu virus.

($1 = 6.4015 Chinese yuan)

(Reporting by Dominique Patton; Additional reporting by Beijing Newsroom and Roberto Samora in Sao Paulo; Editing by Joseph Radford and Phil Berlowitz)

This story has not been edited by Firstpost staff and is generated by auto-feed.


Updated Date: Jun 09, 2018 00:06 AM

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