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Global Poultry Industry Profile

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Latin American Poultry Association Guatemala Declaration

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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.

  1. 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.
  2. 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.
  3. Fiscal Incentives - State and federal taxes in the US and Brazil are waived to encourage the development of the industry.
  4. 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.
  5. Emergency Relief Programs - Support for farmers when there is a natural disaster or poor market conditions has been increasing over the last few years.
  6. 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

  1. 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.
  2. Country Units 1995 2000
    European Union      
    Volume MT 434,500 285,000
    Budget MEuro 136.300 90.700
           
    USA      
    Volume MT 34,200 28,000
    Budget M$ 21.400 14.600

  3. Export Credit Guarantees - The USA (5.5 b USD) and Brazil provide cheap and insured credit to subsidize poultry meat exports.
  4. Food Aid - is often used to dispose of surplus domestic production.
  5. 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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