China ends ban on U.S. poultry imports as pig disease crisis causes meat shortage

BEIJING/WASHINGTON/CHICAGO (Reuters) - Beijing lifted a nearly five-year ban on imports of U.S. poultry meat on Thursday, a move the U.S. Trade Representative said would lead to more than $1 billion in annual shipments to China.

FILE PHOTO: Chickens feed from a row of feed bins at C&A Farms in Fairmont, North Carolina June 10, 2014. Picture taken June 10, 2014. REUTERS/Randall Hill/File Photo

China’s decision comes as the world’s two largest economies are trying to finalize a limited trade deal.

It is also driven by an unprecedented shortage of meat in China after a fatal hog disease, African swine fever, has killed millions of pigs in the pork-loving country over the past year.

China, the world’s top pork consumer, will likely buy all types of U.S. chicken, turkey and duck to offset the pork shortage, said Jim Sumner, president of the USA Poultry & Egg Export Council, an industry group.

“We’re in a state of euphoria,” Sumner said. “At this point, if it’s meat protein, they’ll eat it.”

Shares of American poultry producers rose on the announcement. Tyson Foods gained 2.1%, Sanderson Farms climbed 4.1% and Pilgrim’s Pride Corp rose 1%.

Beijing banned U.S. poultry and eggs in January 2015 because of a U.S. outbreak of avian flu, closing a market that bought $500 million worth of American poultry products in 2013, according to the U.S. Department of Agriculture.

Beijing has a tariff of about 25% on U.S. poultry from before the ban, which is in line with its duties for other countries, Sumner said.

China was previously a major importer of chicken feet and wing tips, providing a valuable market for parts of birds that Americans generally do not eat.

“We believe renewed access to China will present significant opportunities for growth and value creation for our team members, our growers and our business,” said Pilgrim’s Pride, which is mostly owned by JBS SA.

Sanderson Farms, the third largest U.S. poultry producer, began rendering chicken feet and wing tips for products like fertilizer and pet food instead of exporting them for higher returns, after China’s ban. The halt shut a market worth $62 million in total sales for the company in fiscal 2014.

“China has been a significant market for poultry in the past and we look forward to new export opportunities resulting from this opening,” Tyson Foods said.

China agreed to resume purchases after the USDA amended the Federal Register last week to approve imports of poultry products derived from birds slaughtered in China.

China’s total imports of chicken surged nearly 48% to 9.2 billion yuan ($1.3 billion) in the first nine months of this year, including breast meat, which is normally in surplus in the country.

Increased U.S. exports will raise poultry prices for American consumers, said Arlan Suderman, chief commodities economist for INTL FCStone.

“Obviously $1 billion of U.S. poultry doesn’t just magically appear,” he said.

Reporting by Dominique Patton in Beijing and David Lawder in Washington and Tom Polansek in Chicago, additional reporting by Susan Heavey; Editing by Simon Cameron-Moore and Steve Orlofsky