Archive for September, 2011

Chicken Industry Welcomes USTR Challenge to China Action

September 20, 2011

Statement on USTR Announcement by USA Poultry & Egg Export Council and National Chicken Council on China Anti-dumping Case on Chicken
Sept. 20, 2011

This morning United States Trade Representative Ron Kirk announced that his office was initiating dispute settlement at the World Trade Organization (WTO) challenging the Peoples Republic of China’s imposition of anti-dumping and countervailing duties on imports of U.S. chicken (www.ustr.gov).

The U.S. industry greatly appreciates the determination that Ambassador Kirk and his staff have shown to address this significant trade problem. The action being brought is a trade remedy case that challenges the method by which China determined that the product was allegedly sold as less than normal value.

The China case used “average cost of production” to determine normal value rather than using domestic U.S. market prices for comparable sales as is customary in anti-dumping actions. The use of “average cost of production” reflects neither market realities nor the way in which companies in the industry commonly keep their accounts.

The U.S. industry agrees that the Chinese methodology was seriously flawed and that the anti-dumping proceeding did not comply with international rules. The Chinese authorities also found that U.S. poultry exports benefit from farm subsidies, such as support prices for corn and soybeans. The reality is that U.S. poultry receives no government subsidies and does not benefit from any of the government crop programs.

The U.S. industry considers it unfortunate that this dispute has to be addressed through the formal WTO process, but believes that it is necessary that this incorrect methodology be challenged and that U.S. trading rights guaranteed by WTO agreements be protected. This action is essential to demonstrate to the international community that anti-dumping measures based on average cost of production is a form of unfair protectionism that is inconsistent with multilateral trade rules. The U.S. industry also believes that this case will have direct implications for dumping cases that have previously been brought by other WTO Member countries that are also incorrectly based on an average cost of production methodology.

The U.S. industry has been cooperating with the Chinese industry and the Chinese government on other initiatives to improve conditions of two-way poultry trade that are unrelated to the issues being addressed in the case initiated today. The industry’s commitment to those initiatives will continue and not be affected by the initiation of the WTO case. The U.S. industry will continue to work in the future with its Chinese industry counterparts and the Chinese government to resolve any trade irritants that may occur in an amicable fashion, and is hopeful that future problems can be addressed without resort to formal dispute settlement.

The U.S. industry is hopeful that the case will proceed on an expeditious schedule, and that there will be a timely and satisfactory resolution that enforces U.S. rights under the WTO.

For further information contact: Jim Sumner or Toby Moore at the USA Poultry & Egg Export Council (jsumner@usapeec.org or tmoore@usapeec.org) 770 413-0006 or Richard Lobb at the National Chicken Council (rlobb@chickenusa.org) 202 296-2622.

Chicken Farmers and Companies Hit Hard by Corn Prices, Council Tells Congress

September 14, 2011

WASHINGTON – September 14, 2011 — Family farmers and chicken companies alike have been hit hard by the skyrocketing price and short supply of corn, a spokesman for the National Chicken Council told Congress today.

“USDA’s report earlier this week confirmed that it will be much more difficult this crop year to secure an adequate supply of feed ingredients that can be procured at a cost that is both manageable and predictable,” Harrison Poultry chief executive Michael Welch told the Livestock, Dairy and Poultry Subcommittee of the House Committee on Agriculture here Wednesday. “The more than 40 vertically integrated chicken companies that comprise the broiler industry have financially struggled for the past four calendar quarters. Broiler companies have increasingly been squeezed throughout the past corn crop year between rising feed costs and declining prices for chicken products. A number of companies have succumbed to the severe cost/price squeeze by ceasing operations or having to sell their assets at fire-sale values.”

Welch said much of the squeeze results from the enormous, government-mandated demand from the ethanol industry, which will take around 40 percent of this year’s corn harvest to supply the 12.6 billion gallons of ethanol required by federal law to be blended into motor gasoline this year.

The situation is particularly hard on the family farmers who raise chickens under contract with the poultry companies, said Welch, a long-time industry executive and former chairman of NCC.

“I have outlined several critical problems, but none is more paramount than the very unfortunate situation being forced on the family farms who have lost, or are now losing, their contracts to grow broilers,” Welch said. “Disrupting or ceasing the financial flow generated by the contract payments results in not just the broiler operations being jeopardized, but in many cases results in the entire family farm being put in jeopardy.”

“I suggest that if you ask these family farmers if current ethanol policy is good policy you would not be able to find a supporter of the program,” he added.

Welch said the federal government should “stop picking winners and losers” by directing so much corn into ethanol production through its three-pronged program of mandated usage, a tax credit for blending ethanol, and a protective tariff on foreign ethanol.

“Mandating the use of ethanol, subsidizing its cost, and protecting ethanol from competition is triple overkill,” he said. “Greater energy independence is a worthy goal for the United States, but the negative and unintended consequences of moving too far too fast with corn-based ethanol have become overly clear.”

The price of corn began its relentless rise in the fall of 2006, and since then, the broiler chicken industry alone has had to spend an extra $22.5 billion in higher feed costs, Welch said, putting companies under severe financial stress, pushing some out of business, and causing most others to reduce production.

Welch said Congress should change “the rules of the game” to permit animal agriculture producers to compete more fairly for the limited supplies of corn expected over the next few years.

“Included in this effort must be a ‘safety valve’ to adjust the Renewable Fuels Standard (the ethanol mandate) when there is a shortfall in corn supplies,” Welch said. “In addition, a plan should be implemented to allow a reasonable number of good, productive cropland acres to opt out of the Conservation Reserve Program (CRP) on a penalty-free basis.”

The CRP pays farmers to take cropland out of production, which Welch said is a vestige of the traditional federal “policy of abundance” in agriculture. According to a report from the Farm Foundation, the existing policy is “designed to reduce supply, restrict land use and increase demand to help increase and stabilize farm incomes.”

“That policy was developed because the United States has generally been blessed with the ability to produce more than could be consumed at profitable prices for producers,” the Farm Foundation report said. “A shift to a ‘policy of shortage’ would emphasize programs that stimulate supply and do not subsidize demand with taxpayer funds or political mandates.”

“I ask this Committee to support this well-reasoned conclusion of the report,” Welch said.

The National Chicken Council represents integrated chicken producer-processors, the companies that produce, process and market chickens and chicken products. Member companies of NCC account for more than 95 percent of the chicken sold in the United States.

“Contagion” Movie is More Fiction Than Science

September 7, 2011

A review by Richard L. Lobb
National Chicken Council

The new movie “Contagion” had its Washington preview screening Tuesday night (Sept. 6). The good news is that the disease is NOT bird flu and is not spread by birds. It seems to be some sort of influenza/encephalitis that combines a pig virus with a bat virus. It is dubbed MEV-1 and and is said to have been created when “the wrong pig met up with the wrong bat.”

At the very end, it turns out Gwyneth Paltrow got it from the chef who got blood and saliva on his hands from a pig that got it from the bats when the bats were disturbed by the bulldozers at the factory groundbreaking that Gwyneth Paltrow was in China to attend. Capitalism causes all kinds of problems, you see.

Poor Gwyneth dies ten minutes into the film but keeps popping up in flashbacks as dedicated scientists from the Centers for Disease Control and Prevention and the World Health Organization race to uncover the mystery of the virus and to develop a vaccine. Kate Winslet plays a CDC investigator who falls victim to the virus but selflessly tries to develop a contact list (“I need the names of everyone who serviced this room in the last 24 hours!”) between hacking coughs. Alas, she, too, succumbs to the raging epidemic. French actress Marion Cotillard, as the WHO’s Dr. Leonora Orantes, is kidnapped and held hostage by Chinese men intent on getting enough vaccine to save their village. Jennifer Ehle, as the CDC’s Dr. Ally Hextall, finally discovers the vaccine and tests it on herself. Fortunately, it works.

In the meantime, 25 million people around the world die in a matter of months. (Or was it weeks? Hard to tell.) Government agencies other than CDC behave with a combination of timidity, stupidity, and finally armed force as looting breaks out and riots erupt. Jude Law plays an unscrupulous journalist/blooger/activist who fakes symptoms of the disease in order to hype (and profit from) a useless homeopathic remedy.

The film is supposed to be a thriller, but I found myself looking at my watch in between trying to take notes in the dark. If you’re seen the trailer, you’ve seen most of the action parts. Much of the rest consists of meetings of U.S. and international experts and officials and earnest chalk talks on epidemiology. (It reminds me of “The Social Network,” which consisted of pre-trial depositions interrupted by wild parties.)

The film’s depiction of the epidemic agrees with the truth in one respect: it shows that direct contact with the blood of an infected animal can be dangerous. The chef in Hong Kong handles a slaughtered pig and quickly wipes his hands on his blood-smeared apron when he’s asked to go out and shake hands with the American lady who liked the pork ribs. Thus Gwyneth Paltrow becomes the American index case. (There are others in Japan, England, and other countries.)

But the movie goes off the deep end by depicting the disease being spread through the most casual sort of indirect contact. The waiter who picks up Gwyneth’s cocktail glass, and the Ukrainian lady who touches her cell phone, both quickly succumb to the virus. The disease does not so much spread as explode around the world in a few weeks. In truth, nothing spread this easily; if it did, the human race would have died out long ago.

There’s nothing in the film about chicken or poultry except for a fleeting shot of a market in Hong Kong where workers are busily chopping animal parts that could be chicken or could be pork, or something else for all I could tell. But the virus is fairly soon identified as originating in swine, although it is specifically stated that it is not H1N1. No live birds are depicted as playing a role in causing or spreading the epidemic. This is not a movie about bird flu. When a man from Homeland Security asks if the virus could be “weaponized,” Lawrence Fishburne, a top official with CDC, says, “The birds are weaponizing it for us,” but birds are not in fact depicted as carriers of the virus. Those winged things in the ads are bats, not birds. Bats are not birds at all but flying mammals. The species barrier is intact.

The most important thing to remember, however, is simply that the film is a work of fiction and should be appreciated as such. It’s just a movie.