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Cheap US chicken floods local market

Update: August, 06/2015 - 08:24

Chicken legs from the US costing a mere VND20,000 (92 US cents) per kilogramme, cheaper than local products, have flooded the market.

Tong Xuan Chinh, deputy head of the Ministry of Agriculture and Rural Development's Livestock Department, spoke to the media about the issue as well as integration of the Vietnamese livestock industry with the global economy.

Meanwhile, the USA Poultry & Egg Export Council (USAPEEC) had a feedback about that issue.

Tong Xuan Chinh

Why are US chicken legs sold at VND20,000 per kilogramme in Viet Nam?

In December 2014 the US had bird flu in 16 states, and so 30 countries importing US chicken stopped doing so from that moment.

Meanwhile, Viet Nam started to import US chicken in May 2015. So I think a large volume of chicken was in stock in the US due to the stoppage of imports.

According to the US Department of Agriculture, the inventory of frozen chicken rose 27 per cent over 2014.

US producers reconciled to selling their products at cheaper than usual prices to reduce this huge inventory and [also] because they have to spend large sums of money to safeguard the quality of frozen chicken.

Secondly, after the bird flu in 2014, demand for chicken eggs in the US increased 23 per cent. A flock of chickens would lay eggs for 10 months. Then the farms would switch to another flock and sell the previous flock, creating a large supply of chicken meat for export.

Thirdly, in Viet Nam, people like to eat the chicken's legs, neck and wings while customers in Europe and North America prefer chicken breast. These different tastes have enabled traders in Viet Nam to import cheap chicken legs from the US.

However, we have been investigating the quality and food safety of the US chicken before thinking about a dumping lawsuit. Moreover, a dumping lawsuit is not simple because it needs lots of resources and information.

To know exactly if it is dumping on the local market, we need to carry out an investigation and comparison of production costs for a kilogramme of white chicken in Viet Nam and the US.

The cost is about VND29,000-30,000 per kilogramme in Viet Nam, but we do not have exact information about the production costs in the US.

Viet Nam will sign many free trade deals including the TransPacific Partnership (TPP) and ASEAN Economic Community (AEC). They will bring down import tariffs on poultry and beef to zero. How does the ministry plan to deal with this?

The TPP and AEC are expected to be signed in 2016 and the end of this year respectively. Under bilateral trade agreements, some kinds of meats are imported with low tariffs.

However, when it joins the TPP, Viet Nam's livestock industry must face large competitors, including Australia and the US, because those countries have good economic, scientific and technological conditions as well as good varieties and animal feed and thus competitive prices for chicken.

Now Viet Nam has tariff barriers, but after signing the FTAs, most tariffs will fall to zero. The local livestock industry will face disadvantages. But the industry still has time to resolve the difficulties through reform, reduction of production costs and strengthening of their competitiveness.

The industry should expand its scale of production and reduce imports of animal feed by developing materials for producing it at home because animal feed accounts for 65-70 per cent of production cost.

What support is the ministry providing farmers in the US chicken leg saga?

Viet Nam can put up technical barriers against the product besides using taxation. But we must have standard laboratories to create food safety standards for meat imported into Viet Nam.

In fact, Viet Nam has a "natural" technical barrier in the form of its culinary culture. Most Vietnamese like to make food from fresh chicken rather than frozen chicken. Now the frozen meat meets 20 per cent of local demand.

Therefore, local livestock producers still have the opportunity to restructure and improve quality to achieve greater competitiveness. — VNS

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