Canada Poultry and Products Annual Overview

Excerpt from the USDA Foreign Agricultural Service

Executive Summary
•      After Russia, Canada is the second most important export market for U.S. poultry meat. In 2004, U.S. poultry meat exports to Canada reached a record $332 million, accounting for more than 15% of total U.S. poultry meat exports to the world.

•     Canadian chicken imports from Brazil, which first made their way into the Canadian poultry market in 2002, declined 25% in the first six months of 2005 from their level during the same period last year. Imports of cooked chicken from Thailand, on the other hand, rose 78% during January-June 2005 from the comparative year earlier period.
 
•     For 2005, Canadian chicken production has the potential to reach 1.0 million metric tons for the first time. According to the Canadian Chicken Farmers, production in the January-June period of 2005 was almost 7% above the level for the first half of 2004.

•     Canadian turkey production in the first 7.5 months of 2005 rose nearly 10% above the level from the same period a year ago reflecting a higher production target set by Canadian Turkey Marketing Agency. Total Canadian turkey output slipped almost 3% during 2004, as the turkey industry was also impacted by the avian influenza outbreak in British Columbia.

•    Since the mid-1990s, both the Canadian chicken and turkey industries have demonstrated strong export growth due to policies that establish production allocations targeted for export and to GOC tariff rate quota allocation policies that permit special supplementary imports by Canadian poultry processors under an import to re-export program. For 2005, increased exports are expected to result in Canada being a net exporter of both chicken and turkey on a quantity basis.

Broiler Chicken: Production
Despite a major disruption to poultry production in British Columbia (B.C.) in early 2004 due to an outbreak of avian influenza and the subsequent shutdown of a major portion of the B.C. poultry industry, Canadian chicken production reached 946,125 metric tons, almost 2% above the 2003 level. National chicken production was bolstered by the Chicken West Program, a program developed by the Chicken Farmers of Canada (CFC) to ramp up the production in the rest of Canada and ship the resulting product as whole eviscerated birds to B.C. processors, allowing them to maintain their operations and service their customers.

For 2005, Canadian chicken production has the potential to reach 1.0 million metric tons for the first time. According to the CFC, production in the January-June period of 2005 was almost 7% above the level for the first half of 2004. Part of the year over year increase is attributable to lower production in the first six months of 2004.   Similarly, the CFC reports that chicken consumption in the January-June period of 2005 was 2.5% higher than a year ago. On balance, post forecasts total 2005 chicken output to increase approximately 5-6% over last year and reach about 1.0 million metric tons. For 2006, chicken production is forecast to increase another 1.0-2.0%.

Trade
The global access to Canada’s chicken market is determined by a NAFTA formula of 7.5% of the previous year’s Canadian production of chicken as published by Statistics Canada. Based on this formula, Canada’s chicken tariff rate quota (TRQ) for 2005 is 72,538 metric tons. Imports of broiler chicken cuts, fresh or frozen above the TRQ, are assessed an over access duty ranging from 238% to 249%. However, the NAFTA agreement recognizes a supplementary import system which allows additional imports (at zero duty) when Canadian supplies fail to meet market demand. In addition, the GOC allows special imports of chicken (at the duty-free rate) for Canadian processors who manufacture chicken products for re-export and to processors who manufacture processed chicken items (and other products containing chicken) that are not subject to a TRQ (i.e., similar products of U.S. manufacture that enter Canada duty-free under NAFTA).

Total Imports
Total Canadian chicken imports from all sources reached a record 100,000 metric tons during 2004. Almost one-third of the total were classified under the “import to re-export” program mentioned above.

Imports from the United States
U.S. chicken exports to Canada exceeded 80,000 metric tons during 2004, well above the global TRQ of 69,700 metric tons reflecting the supply shortfall in British Columbia brought about by  the avian influenza outbreak in that province and the associated eradication actions by Canadian government authorities. In the period following the 2004 avian influenza outbreak, the GOC issued special supplementary import permits to importers and B.C. processors over and above the TRQ to help alleviate the supply shortfall situation in that province. Virtually all of the increase in chicken imports from the United States in 2004 was whole birds (more than 8,000 MT) imported into British Columbia to enable B.C. processors to preserve their customer base. Reflecting more normal production patterns in Canada in 2005, U.S. chicken exports to Canada are forecast to decline from the 2004 record level that reflected the B.C. avian influenza-associated production shortfall.

Imports from Other Countries
Canada recognized the poultry meat inspection system of Brazil on August 2002, but initially very little Brazilian product was imported. However, during 2004, Canada imported almost 18,808 metric tons of frozen chicken from Brazil, almost one-fifth of total Canadian chicken imports. Cooked chicken product was also imported from Thailand during 2004. Imports of chicken from Brazil in the first six months of 2005 were 25% below the level for the same period last year. Imports from Thailand, on the other hand, rose 78% during January-June 2005 from the comparative year earlier period.

Chicken Exports
In the January-June period of 2005, total Canadian chicken exports reached 57,403 metric tons – almost 60% above the level for the first half of 2004. Canadian chicken exports in the first six months of 2005 to all major markets in the United States, South Africa, and the Philippines rose sharply above 2004 first half levels. Combined, the strong increase in Canadian chicken exports and the predicted decline in chicken imports during 2005 could push Canada to a net export position in chicken for the first time.

Turkey Production
Canadian turkey production in the first 7.5 months of 2005 rose nearly 10% above the level from the same period a year ago reflecting a higher production target set by the Canadian Turkey Marketing Agency. Total turkey output slipped almost 3% during 2004 as the turkey industry suffered the effects of the avian influenza outbreak.   In a normal year, B.C. turkey production accounts for about 11% of total Canadian turkey output. For 2006, Canadian turkey production is forecast to show little change from the 2005 level.