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Domestic Support
Many countries use Domestic Support to protect their industries and/or support
their industries efforts to grow and become more competitive. Since the signing of
the WTO AoA, after which these supports were supposed to decrease, most major poultry
exporting countries have increased the net support to their industries by measures
outlined below. It is important to note that in spite of the more developed nature
of their poultry sectors, the "special and differential treatment" measures of domestic
support are concentrated in the developed nations.
- Subsidies - While direct subsidies to the poultry sector vary significantly
between countries, grain production, which is the main cost component in broiler
production, is the single largest product supported by the 360 b USD in subsidies
spent by the OECD countries on their agricultural sector.
- Industry Financing Costs - The U.S State Farming Agency provides cheap loans
( 3 - 6 % for 20 - 40 years). Brazil has opened a special facility to allow its
poultry export sector to get financing at a global market rates, which are lower than
local rates.
- Fiscal Incentives - State and federal taxes in the US and Brazil are waived to
encourage the development of the industry.
- Market Interventions - In the developed countries, governments intervene to
purchase surpluses of the market when there are surplus, e.g. the USDA purchased
canned spent hens in 2001 when egg prices were depressed.
- Emergency Relief Programs - Support for farmers when there is a natural
disaster or poor market conditions has been increasing over the last few years.
- CARICOM, like many developing countries, removed most of the domestic support
from its industry in the 1980s/90s under the influence of the World Bank / IMF
Structural Adjustment Programs prior to signing the WTO agreement in Agriculture.
In CARIOM the industry access financing at 12 - 30% for 7 - 15 years. However CARICOM
producers which purchase grain from the US benefit from any reduced prices arising
out of the grain support programs.
Export Competition
In addition to Domestic Support, several countries, notably the strongest proponents
of free trade reserved the right to use various measures to subsidize exports to
support domestic industries especially when domestic market conditions are weak.
These measures take several forms
- Export Competition - The EU and the US account for 95% of the export subsidies for
poultry allowed under the WTO AoA have the right to subsidize poultry exports, often
by 33 - 50% of the FOB value of the product. For example in 2000, 30% of EU exports
were subsidized, mainly in the winter months when local demand is weak and mainly to
Middle East and African markets. Exports are normally used into markets where there
is international competition without regard to the impact on local producers.
| Country |
Units |
1995 |
2000 |
| European Union |
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| Volume |
MT |
434,500 |
285,000 |
| Budget |
MEuro |
136.300 |
90.700 |
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| USA |
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|
|
| Volume |
MT |
34,200 |
28,000 |
| Budget |
M$ |
21.400 |
14.600 |
- Export Credit Guarantees - The USA (5.5 b USD) and Brazil provide cheap and
insured credit to subsidize poultry meat exports.
- Food Aid - is often used to dispose of surplus domestic production.
- CARICOM and most developing countries cannot use any of these measures, simply
because they do not have the resources to do so.
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Global Poultry Industry
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Regional Trading Agreements |
SPS /TBT Measures |
Domestic Support & Export Competition |
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