Saturday, June 06, 2015

Indian Poultry Fear Invasion Of American Chicken Legs

For the last 10 years, India's growing love for tender chicken has driven the nation’s poultry industry to new heights, making India one of the fastest-growing poultry producers in the world. But this industry is now threatened by a peculiar foreign invader: the discarded American chicken leg.

Eight years after the Indian government blocked US efforts to export poultry products to India for fear of entry of bird flu, an appellate body of the World Trade Organisation ruled that India’s fears were unsubstantiated and that it could not stop the US from selling poultry meat to India.

The dispute panel upheld an order to that effect that the WTO had passed in October 14. India has been given 12 months-18 months to lift the ban on US chicken.

By honouring the WTO order, India will open up an export market for America that is valued at $300 million a year. There is one product that the US is particularly keen to export to India – chicken legs. In America, most consumers prefer breast sections over chicken legs.

Major fears
When the WTO ruled in favour of the US in October, Indian poultry farmers expressed strong fears that their businesses would collapse if the local market is flooded with American produce.

Poultry breeders’ associations across India had sent several letters of protest to the union animal husbandry department, urging an appeal against the WTO order. In August, when the ministry of external affairs proposed the free import of American chicken legs before the WTO ruling, the National Egg Coordination Committee – a central body of poultry farmers – was up in arms.

“All state bodies representing poultry breeders have protested against American imports,” Vasant Kumar, president of the Poultry Breeders Welfare Association in Maharashtra, had said.

A growth story
Poultry farmers say the fear of bird flu entering the country is just part of the reason why India should reject US exports. The main reason, they say, should be to preserve India’s carefully-built poultry industry.

Two decades ago, India had a limited market for poultry-based produce, but this has changed with increasing urbanisation, higher purchasing power and changing eating habits. Responding to the growing demand, the poultry industry reared more hybrid varieties of birds to improve hatchability and ensure that chicks grow faster and lay more eggs.

“It has taken us 20 years to increase the per capita consumption of poultry meat from 0.5 kg [per capita, per year] to almost 3 kg,” Kumar had said. “In the process, this industry has created millions of jobs across rural India.”

In 2013, rating agency ICRA reported that the demand for broiler chicken meat in India has been growing at more than 10% in the past decade, which has led poultry meat production to treble.

Compared to poultry industries around the world, production costs for Indian hatcheries are low: breeders spend an average of Rs 60-Rs 70 to supply one live chicken to the market. Nearly 80% of the production cost goes into maize and soybean to feed birds. Three years ago, when soybean prices shot up by 30%, poultry farmers had to suffer huge losses.

“We are still recovering from those losses, so if cheap American imports flood our markets, we will not be able to compete,” said Ajay Deshpande, co-owner of the Pune-based Siddhivinayak Breeding Farm that currently sells an average of six lakh broiler chicks a month.

What farmers resent the most is that the US avidly wants to export chicken legs, a part of chicken meat that is typically discarded by Americans.

“In our markets, people predominantly buy whole chicken instead of specific pieces," said Deshpande. "But Indians have a high consumption of leg pieces. In America, people prefer breast pieces and reject chicken legs, probably because the legs have more cholesterol content.”

Frozen meat
While poultry breeders like Deshpande do not want to be dethroned by a product “dumped in India for being unwanted in another country”, they also believe American chicken legs may not be to consumers' tastes.

For one, most of India’s market demands freshly cut chicken, while American chicken would be sold from cold storages.

“Besides, Indian consumers prefer to eat tender chicken, so we sell the birds at five-six weeks of age, when they weigh about 2 kg,” said Ravinder Reddy, technical director at Hyderabad’s SR Hatcheries. American chicken, he said, is typically sold when the birds weigh at least 4-5 kg. “They want to sell us coarse meat.”

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