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USDA International Egg and Poultry

23 January 2013

USDA International Egg and Poultry Review - 23 January 2013USDA International Egg and Poultry Review - 23 January 2013

USDA International Egg and Poultry

Canadian Chicken Industry

Canada’s broiler production in 2013 is expected to increase 0.5% compared to 2012. Imports are expected to grow by 3.7% and exports by 3.5% in 2013 compared to the previous year. Broiler meat consumption has increased over the years. The increase was partly due to the country’s population growth, the pattern of Canada’s immigrant population that is more likely to have dietary preference for chicken rather than beef or pork, and the perception that chicken is leaner and therefore healthier than other meats.

Canada uses a supply management system in the broiler sector and production is tightly controlled through a quota system. Decisions on production volume are taken before every 8-week production cycle, with the national volume allocated to each of the ten producing provinces, and subsequently further allocated to individual producers based on the total production quota. The industry is not vertically integrated; Canada has a multitude of independent chicken farmers supplying live birds to processing companies.

With the supply management system, chicken producers receive a fixed price for their live birds, which is determined every 8-week production cycle, based on production costs. Poultry farmers recover their cost of production from processing plants. In this way, farmers are sheltered from the impact of record high feed costs. The same cannot be said about poultry processors. Their ability to pass on high input costs to downstream customers is limited.

Canada: Broiler Production, Supply and Demand

Source: Foreign Agricultural Service, Official USDA Estimates

Canadian imports of chicken are regulated under a tariff rate quota (TRQ), which is a function of the previous year's production level. The global quota for 2013 is projected at 78,000 MT. In 2012 the TRQ level was 77,000 MT. In recent years, Canadian poultry companies have increasingly utilized International Trade Canada’s Import to Re- Export Program (IREP). Through IREP Canadian chicken processors import chicken under tariff free supplementary import permits for use in processing, provided they re-export the associated processed product. As a result, total chicken imports are about double the TRQ volume, as attributed to IREP imports.

Some Canadian importers are discouraged from importing Brazilian chicken, despite its lower cost, because it cannot be re-exported to the United States. The Canadian Food Inspection Agency (CFIA) has strict import procedures to ensure that Brazilian chicken in Canada does not enter the United States. Canadian poultry slaughter and processing establishments that import poultry meat from Brazil are not eligible to export poultry meat products to the United States.

Canada and Mexico formally joined the Trans-Pacific Partnership (TPP) trade negotiations in October 2012. The TPP is a free trade agreement under negotiation by 11 countries. The other countries in TPP are Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S. Together these 11 countries represent a market of nearly 658 million people.

Source: USDA GAIN Report CA12034; press releases from the Office of the United States Trade Representative and Foreign Affairs and International Trade Canada

Poultry Imports Report – Chicken, in kilograms Monthly Breakdown with Prior Year Comparison

*MSM - Mechanically Separated Meat
(1) Chapter 16 = Preparations of Meat, (2) Chapter 19 = Stuffed Products (<20% Meat), (3) Chapter 21 = Food Preparations (<20% Meat)
Data for Chapter 16, 19 and 21 reflect the actual product net weight and not its content of poultry meat. Includes quantities imported under the import for re-export program (IREP)

Canada: Chicken Imports and Exports

Source: Canadian Food Inspection Agency, Meat and Poultry Division, as compiled by AAFC, AID, Poultry Section

Source: Global Trade Atlas

January 2013

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