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USDA International Egg and Poultry

15 November 2013

USDA International Egg and Poultry: CanadaUSDA International Egg and Poultry: Canada

Canada’s poultry farmers are under a supply management system. Under the supply management system Canada’s poultry farmers are able to pass production costs on to processing plants.
USDA International Egg and Poultry

However, poultry processors’ ability to pass on input costs to their customers is limited causing them to be more vulnerable to market conditions. Because of the supply management system, poultry prices have been consistently higher than pork and a number of beef cuts. Pork and beef are not under supply management programs.

In response to better than anticipated broiler meat demand in 2013, broiler meat production estimates have been increased from 1,045,000 metric tons (MT) to 1,055,000 MT. The new 2013 broiler meat production estimates are 1.7% higher than 2012. Forecasts are for Canadian broiler meat production to increase 1.4% in 2014 to 1,070,000 MT due in part to an expected current short supply of red meat resulting in strong red meat prices.

Source: Statistics Canada/Post *estimate **forecast

Broiler meat production for the decade beginning in 2000 averaged 1.6% growth rate and any future growth in broiler meat production will primarily be influenced by population growth and the ethnic composition of Canada’s immigrants. Currently, African and Asian newcomers have a stronger preference for chicken meat than other red meats.

During the past 30 years domestic chicken consumption in Canada has almost doubled due in part to the country’s population growth and an increase in consumer preference for it. Canada’s population has grown from 24.5 million in 1980 to 34 million in 2010. Canadian per capita broiler meat consumption was 16.9 kilo grams (kg) in 1980 and peaked in 2007 at 31.6 kg per person. In 2014 Canadian per capita broiler meat consumption is forecast to be 30.5 kg per person, up from 2013’s estimate of 30.3 kg per person.

Consumers in Canada prefer white meat (breast and wings) to dark meat (legs). However, as the ethnic mix changes in the general population and for economic reasons leg quarters, which are the least expensive chicken cut in groceries, have been slowly becoming more popular causing a sustained upward trend in retail prices the past few years.

Under the supply management system, broiler meat imports are controlled and subject to a tariff rate quota, which is a function of the production level. For 2014, imports are projected at 145,000 MT, up 5,000 MT from 2013 estimated level.

Source: Statistics Canada / Post *estimate **forecast

The United States (U.S.) is Canada’s largest supplier of broiler meat followed by Brazil. Despite Brazil having lower costing chicken, some Canadian importers are reluctant to import Brazilian chicken because it cannot be re-exported to the U.S. Market conditions in the U.S. play a significant role in import decisions. A large price differential between lower U.S. broiler meat prices and higher Canadian ones create a strong incentive for Canadian importers to bring in more U.S. broiler meat, especially under programs that provide a customs duty exemption like IREP (imports for re-export program).

Canada controls imports of chicken under a tariff rate quota (TRQ). The TRQ is equal to 7.5% of the previous year’s domestic chicken production as reported by Statistics Canada. For 2013 the global chicken TRQ is 77,800 MT based on 2012 production. The global chicken TRQ for 2014 is forecast to increase to 79,100 MT based on estimated 2013 production.

A majority of Canada’s broiler meat exports are “re-exports” under IREP. Exports are required under the IREP program since original imports under the program are prohibited from entering the domestic market. The rest of the broiler meat exports are “genuine” exports consisting mostly of dark meat cuts.

Source: USDA/FAS GAIN Report CA13040

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