September 26, 2008 Poultry in Motion

Volume 4 | Issue 3

U.S.-Chile poultry agreement paves way for increased trade.

As middle classes grow around the world, the demand for more food, particularly high-protein food products, is on the rise. Stepping up to meet this rising demand are U.S. poultry producers, an industry that has seen the export value of U.S. poultry products double from just over $2 billion in 2002 to more than $4 billion in 2007.

On June 20, 2008, U.S. poultry producers received another boost, as the first shipment of frozen U.S. poultry entered the Chilean market, capping a four-year effort by the U.S. and Chilean governments to work out an inspection equivalency agreement. According to the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) office in Santiago, Chile, several Chilean companies are interested in importing U.S. poultry, which helped to spark initial negotiations.

USDA Foreign Agricultural Service Attaché Joseph Lopez, who helped to negotiate the agreement from FAS’s Santiago office, estimates that the market for U.S. poultry into Chile could reach $18 million USD annually. In a broader examination, U.S. exports of poultry and poultry products to South America reached $61.4 million in 2007, up from $43 million in 2002; exports of poultry meat accounted for 40 percent of the 2007 total, as the majority of exports consisted of eggs, egg products and live birds.

When USDA announced the poultry agreement in April 2008, Agriculture Secretary Edward T. Schafer said, “This agreement represents a strong foothold for U.S. poultry exports to South America.” At the time, USDA had just concluded months of negotiations with Chile’s Livestock and Agricultural Service (SAG) to approve the U.S. inspection, control and certification systems provided for under this agreement, which allows poultry and poultry products to enter the Chilean market. But Schafer said the existing free trade agreement (FTA) is what really laid the foundation for the poultry agreement.

In April, all slaughterhouses, cold-storage plants and processing facilities of poultry were incorporated into the list of commercial establishments approved to export their products to Chile. USDA’s Food Safety and Inspection Service (FSIS) manages updates to this list; the exact export certificate language for Chile can be found on the FSIS Web site (www.fsis.usda.gov) under “Export Requirements for Meat, Poultry and Processed Egg Products.”

GROWTH IN TRADE

Since the U.S.-Chile FTA entered into force in 2004, total two-way trade in agricultural products between the United States and Chile has increased from $1.46 billion in 2004 to $2.23 billion in 2007, or 52 percent. In 2007, the United States exported $2.3 million of poultry products to Chile, with live birds, eggs and egg products accounting for most of the total. With the addition of broiler and turkey meat, this new agreement promises to increase demand for U.S. poultry exports.

Poultry meat is a vital source of animal protein in Chile. USDA’s Foreign Agricultural Service (FAS) office in Santiago, Chile, estimates that the country’s domestic consumption of poultry meat has grown more than 200 percent in the last 20 years. FAS-Chile also found that Chile exported poultry products valued at $150 million to 26 different countries in 2006. During the last few years, Chile’s poultry industry has invested significant resources in upgrades, such as modernizing production systems, introducing state of the art technologies, and providing direct and indirect employment to over 20,000 workers. Using industry sources, FAS-Chile also estimates that by 2013, the United States will become the most important export market for Chilean poultry products, a point that helps to underscore the current agreement’s importance to both countries.

In broader terms, the U.S.-Chile FTA acts as a catalyst to resolve any trade impediments and to keep trade flowing.

“When it comes to agreements like this, we’re looking for parity – equal systems for equal trade,” said Michael Yost, Administrator of USDA’s Foreign Agricultural Service. “Last year, exports of U.S. poultry products represented about 1 percent of total trade to Chile. This new agreement puts us back on a level playing field. It also puts us on equal footing with other countries that have trade agreements with Chile, such as Canada and Mexico.”

Jim Sumner, president of the USA Poultry & Egg Export Council (USAPEEC) picked up on this point. “Our industry is genuinely dedicated to principles of free and fair trade,” said Sumner. “Bilateral agreements such as we have with Chile are in everyone’s interests.”

Matthew Herrick is public affairs specialist at the Foreign Agricultural Service within the United States Department of Agriculture.

Subscribe to Industry Today