The recent Sino US chicken trade war has come to an end with China's defeat; This unfavorable news has brought complex feelings to the Chinese chicken industry. Whether engaged in export trade or chicken production, many people are pessimistic and disappointed about the future of the chicken industry. They mostly believe that we have once again lost the opportunity to enter the US market, and they also assume that cheap American chicken products will further impact our already difficult living environment.
Blind pessimism cannot solve the problem. We should objectively view the unfavorable judgment of the Sino US chicken trade war on China. On the one hand, we need to deeply reflect on our shortcomings; On the other hand, we need to face reality, let go of complaints and blame, accumulate and change our development ideas and models, and seek the correct path to quickly solve problems.
Part 1: Background, Background of the China US Chicken Trade War
1. The cessation of chicken trade between China and the United States
The China US poultry trade dispute originated in 2004. At that time, both China and the United States experienced outbreaks of avian influenza, and both sides stopped importing each other's poultry products.
2. The opening of Sino US chicken trade
In April 2004, after negotiations between China and the United States, they agreed to lift their respective bans and agreed that after fulfilling relevant procedures, the United States would export frozen poultry products to China, while China would export cooked poultry products to the United States. However, while ensuring the fulfillment of its commitments, the US hopes to start exporting to China first. China has already opened its market to American poultry products in advance.
3. The Current Situation of Chicken Trade between China and the United States
However, after importing domestic poultry products into China, the United States began to make every effort to prevent the export of Chinese poultry products to the United States. The US Department of Agriculture has repeatedly delayed this matter under the pretext of "fulfilling relevant legal procedures," and has repeatedly stated in government funding bills that "government funding shall not be used to formulate and implement regulations related to the export of Chinese poultry products to the United States." On March 10, 2009, the US Senate passed the Comprehensive Appropriations Act of 2009, which stipulated in Section 727 that "funds provided under this Act shall not be used to formulate or implement rules allowing the United States to import Chinese poultry products." The US government continues to exclude Chinese poultry products by restricting the use of government funds.
Part 2: The Results of the Protracted Sino US Chicken Trade Dispute
China and the United States have started a prolonged chicken trade war, with China implementing several anti-dumping and anti subsidy WTO lawsuits. On August 2, 2013, the World Trade Organization (WTO) ruled that China's imposition of anti-dumping tariffs on American chicken violated world trade rules, and the United States won this prolonged trade dispute.
Part Three: The Impact of WTO Ruling on China's Chicken Industry
On August 2nd, the WTO expert group made a decision unfavorable to China in the dispute over the United States' lawsuit against China for unfairly imposing tariffs on American chicken meat. Most Chinese poultry farming companies did not respond significantly to this news, mainly because China only imports 600000 tons of frozen chicken meat from the United States every year, while the annual consumption of broiler chickens has far exceeded 10 million tons. The proportion is not too large. Meanwhile, the chicken products imported from China to the United States mainly consist of by-products such as chicken wings, chicken feet, and chicken legs. Moreover, products in the United States have larger specifications than those in China, are generally used as industrial raw materials, have different sales channels, and do not directly compete with products from domestic manufacturers, so their impact on the company is not significant.
Part Four: Looking at the Four Main Reasons for China's "Double Reaction" to American White Feather Broiler Chickens
Reason 1: Domestic broiler production enterprises generally suffer losses and have huge complaints
According to industry statistics, the current production of white feathered broiler chickens in China was 10 million tons last year. According to updated statistics, 89% of China's imported broiler chickens came from the United States in the first six months of 2009, up from 73% in the same period of 2008. The proportion of poultry meat segmentation enterprises operating in most production areas is only about 50-60%, and the backlog of poultry meat inventory is about 600000 to 700000 tons, which is severe. The excessive supply of broiler chickens in the market has seriously affected the industry's profits, making it unprofitable for farmers. More than 20 group enterprises have been affected by the import of broiler chickens from the United States, among which companies such as CP Group, Beijing Huadu, Shandong Minhe, and Taiwan Dacheng have been particularly affected.
In fact, in the domestic market, chicken meat appears more as a substitute for pork, whether it is an active choice or a passive acceptance of the meat inside the Baiji bread; The consumption scale of chicken is inversely proportional to the supply of pork and directly proportional to the price of pork. Therefore, the core influencing factor product of chicken is pork. The significant decline in consumer prices of chicken products since 2008, as well as the serious backlog of chicken products and slow terminal sales, are mainly due to the continuous oversupply of pork in China for five consecutive years since 2008, as well as the continuous food safety issues, which have caused a significant decrease in consumer confidence in pork and led to a sustained decline in pork prices. This has also led to an increased demand for pork as a substitute for chicken.
The rapid development of the meat products industry has led to an overall oversupply of products, which may appear to be due to sluggish consumption, but is actually due to market saturation; This is the fundamental reason for the insufficient production and inventory backlog of Chinese chicken enterprises.
Reason 2: The United States has a disproportionately high proportion of imported chicken meat from various countries in China
According to data from the Ministry of Commerce, in 2008 alone, China imported 790000 tons of chicken meat and products from around the world, including 580000 tons from the United States. The total amount of chicken meat domestically has exceeded 10 million tons. This data should indicate that American chicken is more competitive compared to chicken from other countries in the world. American chicken, which accounts for less than 6% of the domestic total, has little impact on the domestic chicken market, while other competing foreign companies are more affected,.
Reason 3: Chinese broiler farmers have low breeding income
The link with low returns in the Chinese chicken industry chain is farmers and breeders, who are involved in the harsh environmental conditions of the entire chain and bear the operational risks of the entire industry.
At present, the breeding process in China is different from that in foreign countries. The breeding process in foreign countries is a high-yield process. In addition to government subsidies, the key lies in the good habits of Westerners who follow the rules and regulations. In the upstream chicken seedling stage, diseased or unqualified chicken seedlings are never allowed to enter the breeding process. In the side drug stage, after years of industrial development in the West, standardization has become a basic principle of the industry. In addition, foreign breeders have already industrialized and become workers. They have high industrial literacy and manage broiler farming completely according to operating procedures. Therefore, their breeding risks are almost zero, and their breeding income is relatively stable and high. In China, due to the lack of standardized industrial thinking training, Chinese people have a strong sense of speculation and arbitrariness. Upstream poultry companies often reduce immunization expenses and release unqualified chicken chicks to the market in order to reduce costs and achieve healthy chick targets. On the other hand, peripheral pharmaceutical companies have been using fuzzy and grey operations in the raw material composition ratio of drugs to obtain higher profits, resulting in unstable drugs and difficult to guarantee medical effects. This is the key to the low income and high risk of domestic farmers.
Therefore, the main reasons for the low breeding efficiency of Chinese broiler farmers are twofold: first, the chicken seedlings are diseased or have weak physical fitness; Secondly, the unstable composition of the drug makes it difficult to guarantee the therapeutic effect, often causing bankruptcy damage to farmers.
Reason 4: The United States does not import chicken from China
Not only has the United States banned the import of chicken from China, but even European countries have imposed many restrictions on the import of Chinese chicken; In order to ensure food safety, China's chicken importing country Japan has also introduced the "Positive List System" to increase the testing of imported food, and even some special units in China prohibit members from eating domestically produced meat products.
During the Beijing Olympics, more than 600 American athletes will compete in Beijing, and their diet has become a major challenge for the US Olympic Committee. Later, nutritionists Jacques Hamilton and Pro from the US Olympic delegation have reached agreements with Japanese exporters to supply fish, as well as with Australian companies to supply fruits and vegetables. The US Olympic Committee has reached an agreement with Kellogg's and Tyson Foods of the United States to transport over 11 tons of protein food to Beijing before the opening of the Beijing Olympics.
Part 5: The Industrialization Development Direction of China's Chicken Industry in the Future
From the above analysis, we can see that the key issue hindering Chinese chicken enterprises from participating in international competition is the inability to guarantee the food safety of chicken under the existing business model. The United States has also experienced a period of brutal growth in the food industry, and the safety issues presented in 'Food Factory' are deeply abhorred; The Chinese people's unruly work style makes it difficult for them to accept the chicken products they produce. The greater challenge is that the chicken food produced according to the existing "company+cooperative (farmer/base)" business model cannot withstand testing. Therefore, the future chicken industry must upgrade its business model to ensure food safety and stable benefits in the breeding process.
To be honest, the current business model of the entire chicken industry chain, which concentrates risks and losses on a group of vulnerable and risk resistant breeders, has both moral hazards and makes the originally high-risk industry chain very fragile in China's specific social environment. The drawbacks of this model have seriously hindered the competitiveness of China's broiler industry and brought significant negative effects to the industry. This also determines that the future development of China's chicken industry should focus on solving the breeding resources upstream of the industry chain and the key breeding links in the industry chain, and the control of the breeding links can be achieved through relationship reconstruction.
In the process of upgrading and rebuilding the industrial chain, the industrial thinking logic of "leasing breeding plants and hiring breeding workers" can be used to solve the arbitrariness and speculative thinking of farmers, ensuring food safety and stable and controllable development of the industry.
Blind pessimism cannot solve the problem. We should objectively view the unfavorable judgment of the Sino US chicken trade war on China. On the one hand, we need to deeply reflect on our shortcomings; On the other hand, we need to face reality, let go of complaints and blame, accumulate and change our development ideas and models, and seek the correct path to quickly solve problems.
Part 1: Background, Background of the China US Chicken Trade War
1. The cessation of chicken trade between China and the United States
The China US poultry trade dispute originated in 2004. At that time, both China and the United States experienced outbreaks of avian influenza, and both sides stopped importing each other's poultry products.
2. The opening of Sino US chicken trade
In April 2004, after negotiations between China and the United States, they agreed to lift their respective bans and agreed that after fulfilling relevant procedures, the United States would export frozen poultry products to China, while China would export cooked poultry products to the United States. However, while ensuring the fulfillment of its commitments, the US hopes to start exporting to China first. China has already opened its market to American poultry products in advance.
3. The Current Situation of Chicken Trade between China and the United States
However, after importing domestic poultry products into China, the United States began to make every effort to prevent the export of Chinese poultry products to the United States. The US Department of Agriculture has repeatedly delayed this matter under the pretext of "fulfilling relevant legal procedures," and has repeatedly stated in government funding bills that "government funding shall not be used to formulate and implement regulations related to the export of Chinese poultry products to the United States." On March 10, 2009, the US Senate passed the Comprehensive Appropriations Act of 2009, which stipulated in Section 727 that "funds provided under this Act shall not be used to formulate or implement rules allowing the United States to import Chinese poultry products." The US government continues to exclude Chinese poultry products by restricting the use of government funds.
Part 2: The Results of the Protracted Sino US Chicken Trade Dispute
China and the United States have started a prolonged chicken trade war, with China implementing several anti-dumping and anti subsidy WTO lawsuits. On August 2, 2013, the World Trade Organization (WTO) ruled that China's imposition of anti-dumping tariffs on American chicken violated world trade rules, and the United States won this prolonged trade dispute.
Part Three: The Impact of WTO Ruling on China's Chicken Industry
On August 2nd, the WTO expert group made a decision unfavorable to China in the dispute over the United States' lawsuit against China for unfairly imposing tariffs on American chicken meat. Most Chinese poultry farming companies did not respond significantly to this news, mainly because China only imports 600000 tons of frozen chicken meat from the United States every year, while the annual consumption of broiler chickens has far exceeded 10 million tons. The proportion is not too large. Meanwhile, the chicken products imported from China to the United States mainly consist of by-products such as chicken wings, chicken feet, and chicken legs. Moreover, products in the United States have larger specifications than those in China, are generally used as industrial raw materials, have different sales channels, and do not directly compete with products from domestic manufacturers, so their impact on the company is not significant.
Part Four: Looking at the Four Main Reasons for China's "Double Reaction" to American White Feather Broiler Chickens
Reason 1: Domestic broiler production enterprises generally suffer losses and have huge complaints
According to industry statistics, the current production of white feathered broiler chickens in China was 10 million tons last year. According to updated statistics, 89% of China's imported broiler chickens came from the United States in the first six months of 2009, up from 73% in the same period of 2008. The proportion of poultry meat segmentation enterprises operating in most production areas is only about 50-60%, and the backlog of poultry meat inventory is about 600000 to 700000 tons, which is severe. The excessive supply of broiler chickens in the market has seriously affected the industry's profits, making it unprofitable for farmers. More than 20 group enterprises have been affected by the import of broiler chickens from the United States, among which companies such as CP Group, Beijing Huadu, Shandong Minhe, and Taiwan Dacheng have been particularly affected.
In fact, in the domestic market, chicken meat appears more as a substitute for pork, whether it is an active choice or a passive acceptance of the meat inside the Baiji bread; The consumption scale of chicken is inversely proportional to the supply of pork and directly proportional to the price of pork. Therefore, the core influencing factor product of chicken is pork. The significant decline in consumer prices of chicken products since 2008, as well as the serious backlog of chicken products and slow terminal sales, are mainly due to the continuous oversupply of pork in China for five consecutive years since 2008, as well as the continuous food safety issues, which have caused a significant decrease in consumer confidence in pork and led to a sustained decline in pork prices. This has also led to an increased demand for pork as a substitute for chicken.
The rapid development of the meat products industry has led to an overall oversupply of products, which may appear to be due to sluggish consumption, but is actually due to market saturation; This is the fundamental reason for the insufficient production and inventory backlog of Chinese chicken enterprises.
Reason 2: The United States has a disproportionately high proportion of imported chicken meat from various countries in China
According to data from the Ministry of Commerce, in 2008 alone, China imported 790000 tons of chicken meat and products from around the world, including 580000 tons from the United States. The total amount of chicken meat domestically has exceeded 10 million tons. This data should indicate that American chicken is more competitive compared to chicken from other countries in the world. American chicken, which accounts for less than 6% of the domestic total, has little impact on the domestic chicken market, while other competing foreign companies are more affected,.
Reason 3: Chinese broiler farmers have low breeding income
The link with low returns in the Chinese chicken industry chain is farmers and breeders, who are involved in the harsh environmental conditions of the entire chain and bear the operational risks of the entire industry.
At present, the breeding process in China is different from that in foreign countries. The breeding process in foreign countries is a high-yield process. In addition to government subsidies, the key lies in the good habits of Westerners who follow the rules and regulations. In the upstream chicken seedling stage, diseased or unqualified chicken seedlings are never allowed to enter the breeding process. In the side drug stage, after years of industrial development in the West, standardization has become a basic principle of the industry. In addition, foreign breeders have already industrialized and become workers. They have high industrial literacy and manage broiler farming completely according to operating procedures. Therefore, their breeding risks are almost zero, and their breeding income is relatively stable and high. In China, due to the lack of standardized industrial thinking training, Chinese people have a strong sense of speculation and arbitrariness. Upstream poultry companies often reduce immunization expenses and release unqualified chicken chicks to the market in order to reduce costs and achieve healthy chick targets. On the other hand, peripheral pharmaceutical companies have been using fuzzy and grey operations in the raw material composition ratio of drugs to obtain higher profits, resulting in unstable drugs and difficult to guarantee medical effects. This is the key to the low income and high risk of domestic farmers.
Therefore, the main reasons for the low breeding efficiency of Chinese broiler farmers are twofold: first, the chicken seedlings are diseased or have weak physical fitness; Secondly, the unstable composition of the drug makes it difficult to guarantee the therapeutic effect, often causing bankruptcy damage to farmers.
Reason 4: The United States does not import chicken from China
Not only has the United States banned the import of chicken from China, but even European countries have imposed many restrictions on the import of Chinese chicken; In order to ensure food safety, China's chicken importing country Japan has also introduced the "Positive List System" to increase the testing of imported food, and even some special units in China prohibit members from eating domestically produced meat products.
During the Beijing Olympics, more than 600 American athletes will compete in Beijing, and their diet has become a major challenge for the US Olympic Committee. Later, nutritionists Jacques Hamilton and Pro from the US Olympic delegation have reached agreements with Japanese exporters to supply fish, as well as with Australian companies to supply fruits and vegetables. The US Olympic Committee has reached an agreement with Kellogg's and Tyson Foods of the United States to transport over 11 tons of protein food to Beijing before the opening of the Beijing Olympics.
Part 5: The Industrialization Development Direction of China's Chicken Industry in the Future
From the above analysis, we can see that the key issue hindering Chinese chicken enterprises from participating in international competition is the inability to guarantee the food safety of chicken under the existing business model. The United States has also experienced a period of brutal growth in the food industry, and the safety issues presented in 'Food Factory' are deeply abhorred; The Chinese people's unruly work style makes it difficult for them to accept the chicken products they produce. The greater challenge is that the chicken food produced according to the existing "company+cooperative (farmer/base)" business model cannot withstand testing. Therefore, the future chicken industry must upgrade its business model to ensure food safety and stable benefits in the breeding process.
To be honest, the current business model of the entire chicken industry chain, which concentrates risks and losses on a group of vulnerable and risk resistant breeders, has both moral hazards and makes the originally high-risk industry chain very fragile in China's specific social environment. The drawbacks of this model have seriously hindered the competitiveness of China's broiler industry and brought significant negative effects to the industry. This also determines that the future development of China's chicken industry should focus on solving the breeding resources upstream of the industry chain and the key breeding links in the industry chain, and the control of the breeding links can be achieved through relationship reconstruction.
In the process of upgrading and rebuilding the industrial chain, the industrial thinking logic of "leasing breeding plants and hiring breeding workers" can be used to solve the arbitrariness and speculative thinking of farmers, ensuring food safety and stable and controllable development of the industry.
