November 29, 2016 / 6:10 AM / a year ago

In face of chicken shortage, China poultry firm seals deal for foreign breeding birds

BEIJING (Reuters) - China’s top chicken breeder Shandong Yisheng Livestock & Poultry Breeding Co has secured a rare supply of breeding birds from a French genetics firm, a step it hopes could help pave the way to boosting the security of the nation’s meat supply.

The world’s second largest poultry market imports all the breeding stock for its white-feathered broiler chickens, the type used in fast food.

But China has banned poultry shipments from a number of countries in the wake of bird flu outbreaks around the world, leading to its first shortfall in chicken meat in at least a decade.

Yisheng said late last week that Hubbard, a unit of genetics company Groupe Grimaud, would supply it with so-called ‘great-grandparent’ birds, or the offspring of pedigree lines, under a three-year contract worth nearly 72 million yuan ($10.4 million).

Foreign genetics firms currently only sell ‘grandparent’ stock to Chinese breeders, from which local firms can breed and sell progeny to farmers.

“The significance of this is to reduce the times needed to import grandparents. Normally importing great-grandparents all at once can save five to six times of importing grandparents,” Jiang Taibang, board secretary at Yisheng, told Reuters.

The company said in a stock exchange statement that the new agreement would allow China to protect its “national poultry industry’s healthy and orderly development”.

Li Jinghui, managing director of the China Poultry Association, said the move was also significant as it could eventually lead to China having the option of regenerating its poultry flock in the event that imports of breeding stock came to a complete halt.

Great-grandparent stock can be selected to produce another generation of breeding birds, unlike grandparent stock.

China has tried to create its own broiler breeds several times in the past, but has so far been unsuccessful. It remains a key priority for the industry, however.

Foreign suppliers have typically been reluctant to sell great-grandparent birds, wary of how the genetics will be managed and marketed.

But Groupe Grimaud’s China chief representative Huang Shi said the move would boost its market share in China. Global broiler genetics leader Aviagen [EWESJA.UL] is currently top supplier to China’s breeding market, which was worth around $40 million in 2014, according to the U.S. agriculture department.

Yisheng’s shares fell over 7 percent on Tuesday morning after resuming trading following the deal. Other Chinese poultry firms moved less than 1 percent.

Reporting by Dominique Patton. Additional reporting by Beijing Newsroom; Editing by Joseph Radford

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