WTO ruling may not affect India’s poultry industry

By: |
New Delhi | Published: June 6, 2015 8:50:45 AM

Almost 96% of consumption in India is of live birds and just 4% of frozen meat.

poultry industry in indiaAlmost 96% of consumption in India is of live birds and just 4% of frozen meat. (Reuters)

Even though the US has won the poultry ban case against India, potentially getting access to a sizable portion in the market of 1.2 billion people, the industry does not seem to be too worried about its immediate impact.

On Thursday, the World Trade Organization (WTO) ruled that the Indian ban on import of poultry meat, eggs and live pigs from the US was “inconsistent” with the international norms, giving New Delhi 12-18 months to implement the ruling. This has opened the doors of the Indian market for US poultry.

However, “there is no immediate threat to the industry,” GB Sundararajan, managing director, Suguna Foods Ltd, told The Indian Express. The consumer market in India is largely driven by “whole chicken and I don’t see any immediate impact on the industry. It is only may be two years later that we may see an impact,” he said, adding that currently in India almost 96 per cent of retail consumption is of live birds and hardly 4-5 per cent of frozen chicken meat.

India had placed a ban on US poultry in 2007 raising concerns of avian influenza. Following the ban, in 2012 the US trade representative dragged the country to the WTO, which in October last year ruled that the ban was discriminatory and lacked scientific evidence. It held the US had seen no outbreak of high pathogenic avian flu since 2004, while India, despite not allowing US imports, had recorded over 90 such outbreaks. On January 26, India appealed the ruling. However, the WTO appellate body said that India’s avian influenza measures are inconsistent because they are not based on a risk assessment.

India is a big market for the US, which is one of the world’s largest exporters of chicken meat. The ruling comes at a time when the US’s poultry exports have declined sharply to $1.76 billion in 2014 from $2.013 billion in 2013 due to trade ban with Russia effective August 2014. While, simultaneously India’s broiler meat consumption has been consistently increasing and is estimated to have touched 3.72 million tonnes in 2014, from 3.45 million tonnes in 2013. Trade experts said that a huge surge in import of chicken legs is expected and tariff may not be the effective tool to curb it. However, its only chicken legs which is likely to be imported from the US. While in the US, consumer preference is for chicken breasts, there is practically no domestic market for legs. The bulk of it is frozen for exporting to other countries.

The US Department of Agriculture sees India’s poultry meat consumption growing to 6.4 mt by 2023. India’s chicken industry is around Rs 80,000 crore. According to a joint statement by the US Poultry and Egg Export Council and National Chicken Council, once the restrictions are lifted, export to India from US is estimated to be $300 million a year.

For Updates Check Economy News; follow us on Facebook and Twitter

Do you know What is Centrally Sponsored Scheme, Non Tax Revenue, Non Debt Capital Receipts, Consolidated Fund of India, Disinvestment? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Narendra Modi visit: Mamata Banerjee arrives in Bangladesh, hails ‘historic’ LBA
2Bhushan Power gets lifeline, debt recast under 5/25 scheme
3Jawaharlal Nehru Port Trust, Maharashtra Maritime Board ink MoU to develop port