| BEIJING, Sept 5
BEIJING, Sept 5 China's near two-year ban on
U.S. imports of chickens used for breeding is threatening
supplies of chicken meat in the world's second-largest poultry
market, leading to the first shortfall in at least a decade and
potentially pushing up prices.
China relies on imported breeding stock for production of
white-feathered broiler chickens, the type used by fast-food
chains, which account for more than half the country's chicken
But Beijing banned poultry imports from the United States
last year in response to a December 2014 bird flu outbreak.
That, followed by a similar ban on imports from France late last
year, has seen a sharp drop in the supply of white-feather
Grandparent birds are the progeny of pedigree stock bred
largely by three global companies, Aviagen, Cobb-Vantress and
Groupe Grimaud. China has so far been unsuccessful in developing
its own white-feather pedigree lines.
Imports of breeding chicks - shipped in lots of 168 - fell
to 720,000 units last year, around half the levels of 2013, said
Fujian Sunner Development Co, a chicken supplier to
Yum Brands' KFC.
Only 110,000 units have entered the market so far this year,
it added in its first half-report, well below what is needed to
produce enough broiler chickens for next year's demand.
The U.S. supplies about half of the world's breeding chicks,
followed by the United Kingdom. Only Spain and New Zealand, much
smaller producers, can currently ship chicks to China.
"Even if the government lifts its bans by the end of the
year, next year's supply [of meat] wouldn't recover," said Pan
Chenjun, senior analyst at Rabobank.
The World Organization for Animal Health declared the U.S.
free of bird flu in April but China is yet to lift its ban.
Poultry prices have already been rising following a recent
surge in prices of pork, the country's most popular
That has pushed some consumers, such as school canteens, to
buy more poultry, a cheaper substitute, helping the industry
recover some demand after a protracted decline caused by food
safety fears and China's own outbreaks of bird flu.
A shortfall next year, forecast by Rabobank at around 1
million tonnes or 8 percent consumption, could push prices up by
as much as 20 percent from a current 19.8 yuan ($2.96) per kg,
However, prices will be kept in check by alternatives such
as duck meat and increased imports.
China will import 480,000 tonnes of poultry meat next year,
up 33 percent from this year, from markets like Brazil,
Argentina and Chile, said a recent report by U.S. agriculture
department attaches in Beijing.
"Next year's chicken price will certainly be higher than
this year, but it will definitely be at an acceptable level,"
said Huang Jianming, director of the China White Feather Chicken
Alliance, adding that it wouldn't rise high enough to spur
The situation, meanwhile, is offering temporary benefits for
domestic poultry firms.
The price of parent stock, or birds bred from imported
chicks that produce broiler chickens, has jumped tenfold in the
past year to 45 yuan ($6.74) a package.
That helped Shandong Yisheng Livestock and Poultry
, Asia's top broiler breeder, generate first half
profits of 270 million yuan, against losses of 192 million yuan
a year ago.
The situation could also drive more consolidation in the
industry, pushing out smaller players unable to get their hands
on sufficient parent stock.
"In 2016 and 2017 supply in the white feather broiler sector
is going to be damaged for quite a long period, and we expect
the whole industry could see new opportunities in the next three
years," said Fujian Sunner.
($1 = 6.6793 Chinese yuan renminbi)
(Reporting by Dominique Patton, additional reporting by Beijing
Newsroom, editing by Richard Pullin)