WTO ruling: India cant chicken out from this war

Written by Geeta Nair | Pune | Updated: Oct 17 2014, 07:34am hrs
With 65,000 million eggs a year and 3.8 million tonne of annual production of poultry meat, India is the second largest producer of eggs and third largest producer of broiler meat. But backyard poultry farmers as well as large poultry and poultry product companies in India could soon be facing competition from US poultry farmers.

Armed with the WTO ruling against India's ban on imports of chicken from the US, the US poultry industry is waiting for the Indian market to open up. India has 60 days to appeal against the ruling at the WTO appellate and they have to respond in 90 days, which means India has around six months to deal with the challenge to its poultry industry, which has remained protected so far from global competition.

The US trade representative (USTR) announced on Tuesday the WTO had ruled against India in its ban on US poultry products. USA Poultry and Egg Export Council (USAPEEC) and National Chicken Council (NCC) representatives said though the ruling does not give the US automatic access to India's market, it is a key step towards opening the market.

India had banned US poultry products in 2007 to protect Indian poultry from avian influenza, when the USTR initiated consultation in 2012 and refuted India's claims. USAPEEC president James Sumner called the ban thinly veiled protectionism, while NCC president Michael Brown said the ruling should send a signal to India and other countries that have placed a similar ban that they are inconsistent with WTO and World Organization for Animal Health rules.

The US is looking at offsetting the loss because of the ban in Russia on US poultry imports by exporting to India.The US poultry industry says the Indian consumers deserve access to affordable and safe proteins which the US has the ability to provide.

The National Egg Coordination committee (NECC) has not responded to these developments. Venkateshwara Hatcheries Group (VHG), which is the biggest player in this business in India, too did not offer comments. But the NECC stand on allowing US imports is clear and they had in July 2014 feared the possibility of imports and warned that it would be unfair to Indian poultry farmers. India had removed quantitative restriction on imports in 2001 but raised customs duty to 100%.

According to NECC, the US heavily subsidises poultry farmers and provides production subsidies while Indian poultry farmers do not get any. NECC has expressed fears that US will dump chicken legs in the Indian market at low prices. VHG, that has been at the forefront of the poultry farmers lobby, has campaigned against import of chicken legs to India for eight years and managed to get duty imposed on imports.

NECC has been demanding imposition of anti-dumping duty on import of processed poultry products from the US to ensure a level playing field for domestic producers. Such dumping had hurt the poultry industry in Sri Lanka, Philippines, Vietnam, Mexico and Russia. These countries had to impose a ban or put restrictions on import from the US, NECC said.

Why US is eager to put American chicken on Indian plates

The appetite of the Indian market is hard to ignore. According to ICRA, the Indian poultry sector has been growing around 8-10% annually over the last decade, with broiler meat volumes growing at more than 10% while table egg is growing at 5-6%, driven by increased domestic consumption. ICRA data estimates domestic poultry meat production to have increased from 1 million tonne in 2000 to 3.4 mt in 2012, with per capita consumption increasing from 0.8 kg to 2.8 kg per annum. Table egg production is estimated to have increased from 30 billion eggs in 2000 to 66 billion eggs in 2012, with per capita egg consumption increasing from 28 to 55 eggs in that period. "The healthy growth in poultry output over the last decade makes India one of the fastest growing major world markets in the segment, with future growth potential remaining strong on the back of a wide gap against global per capital consumption norms and favourable socio-economic factors," the ICRA report has said. "Transition from a predominantly live bird/wet market to a chilled/frozen market is crucial for the future expansion of the domestic poultry industry as well as to increase presence in international trade where India has negligible presence," it added.