The Chicken Meat Trade and regional production
By Elizabeth Morgan
Chicken is the world’s favourite meat after pork. Since the 1940s, it has become the favoured meat in the USA. It is also a favourite in the Caribbean, especially in more recent years, with the increasing price of other meats, such as pork, beef, lamb, goat and fish, and with the popularity of fast convenience foods and the expansion of the tourist industry.
The price of locally produced chicken meat has been increasing in Jamaica and there is an ongoing discussion about the importation of chicken meat, particularly the dark meats – chicken legs and tights (chicken leg quarters), and backs and necks.
Let me begin by informing that information I have found confirms that dark and white poultry meats have nothing to do with race, ethnicity or slavery. The dark meats from the active limbs of the bird have more oxygen and iron than the lighter, milder (white) meat of the breast and wing quarter. Interestingly, these dark meats are considered the most flavourful parts of the chicken. With that said, the discussion in Jamaica, raises the supply and price of chicken meat and whether customs duties applied on imports should be reduced. Given the discussion in the public domain, I thought that I would make a contribution.
The world’s largest chicken producers and consumers are in the USA, China, Brazil, Russia, and India. Note that chicken feet, consumed in the Caribbean, are a delicacy in China and other parts of Asia. It was possibly introduced to the Caribbean from Asia.
Chicken is now about 80% of the meat consumed in the Caribbean especially with the expanded tourist industry and the popularity of fast food both local street food, e.g. pan chicken; rotisserie chicken, and fast-food outlets, local and foreign. I am informed that 300, 000 metric tonnes (mt) of chicken meat is produced in the region, with 123, 636 mt produced in Jamaica in 2020. The regional requirement, including Haiti*, is for about 490, 000 mt. Thus, 190,000 mt would have to be imported. Imports mainly come from the USA and Canada, the leg quarters, backs and necks, and feet, which attract high customs duties in some countries.
The customs duties applied in CARICOM countries are established in their schedules at the World Trade Organization (WTO) as their ceiling duties (bound rates) for agricultural products, and in the CARICOM Common External Tariff for sensitive agricultural products, which is 40%. CARICOM Member States, on notification, apply their WTO customs duties, which include tariffs and other duties and charges (ODAs). ODAs are stamp duties and other taxes applied on imports. Thus, the customs duties on imported chicken parts in individual countries can be up to 286%.
Now, why is this? It has been the view that the region needs to promote local production for food security and to provide rural employment. There was also concern about the importation of cheap chicken leg quarters from the USA, which threatened the viability of local producers, whose cost of production was quite high. In the USA, the white breast meat was in greater demand and sold for a higher price than leg quarters. Breast could cost US$1 per pound, while leg quarters could be US$0.50 per pound. The US used to export about 50% of its dark meat at even lower prices, such as US$0.07 per pound. This, in fact, could be considered dumping.
The Caribbean Poultry Association (CPA) was established in 1999 to represent local poultry producers and promote the development of the industry in all its aspects. Members are now mainly from Barbados, Belize, Guyana, Jamaica, Suriname and Trinidad and Tobago. The CPA lobbied for higher customs duties to be applied on imported leg quarters, and was interested in having its members export chicken within the region. In about 2015, there was approval in CARICOM for intra-regional trade in poultry and there has been trade.
Belize is now self-sufficient in poultry production. Guyana has been increasing investments in its industry. In Trinidad and Tobago, it is reported that the Government remains committed to the development of its local industry. Jamaican producers have invested in production facilities for hatcheries in the USA. It seems generally the aim is to improve production across the region to achieve self-sufficiency, as far as practicable. I am informed that a study is to be done of the industry, among other things, to determine its sustainability and its contribution to the gross domestic product (gdp) in the various countries.
In the USA, since the 2009 economic crisis, the domestic consumption of dark poultry meat has increased, and also because it had excess supplies with a reduction in exports to Russia and China. Production also fell in 2020 with the COVID economic impact.
Nevertheless, the US still has cheaper leg quarters for export. In 2021/22, in the US retail market, one pound of chicken leg quarters was selling for US$0.89 per pound, while boneless chicken breast cost US$3.33 per pound. So, you can imagine that the US wholesale and export price for leg quarters would be much lower.
I am reliably informed that the local butcher shop price for one pound of chicken produced in Jamaica is J$440.00, which converted is estimated at US$3.00 per pound. It does appear that the price of locally produced chicken across the region is much higher than the price for imports from the USA and elsewhere.
I would say that reducing customs duties will benefit local consumers, but may not be so beneficial for the local producers, especially small farmers. There has to be a guarantee from the CPA and its producers that every effort is being made to improve local production, stabilize production costs, and to make the poultry industry sustainable to really promote food security.
Decisions must be carefully considered taking account of all current factors affecting consumers and producers.
*Haiti is a net importer of poultry meat, and, in 2020, imported 115,138 m. tonnes of poultry meat primarily from the USA.
Submitted by Elizabeth Morgan, Specialist in International Trade Policy and International Politics
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