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Tuesday, September 28, 2010 - 9:15am

Chicken Producers Brace For Tax Hike

China’s Ministry of Commerce plans to severely tax American-produced poultry. It’s a blow to Georgia’s billion-dollar broiler industry.

After a year-long investigation, the Chinese government says U.S. poultry companies are “dumping” chickens there. That’s a business term for importing chickens at very low prices to increase their price in China, thereby unfairly competing with local producers.

In response, the Chinese Commerce Ministry plans to tax some American poultry imports as much as 105%.

One of them is Pilgrim’s Pride, which has several plants in Georgia.

Dr. Scott Russell of the University of Georgia says that will hurt Georgia poultry producers.

“I don’t know if it would completely preclude sales of U.S. poultry to China but it would certainly inhibit it to a great deal.”

He says the decision does not reflect the U.S. poultry industry, but rather China’s economic policy-making:

“I think it’s a political move, I think China and other countries – Russia too – occasionally want to enhance their poultry industries by disallowing the importation of poultry from the United States.”

In 2008, the Chinese consumed more than $700 million worth of American chicken products.

Broiler chickens are one of Georgia’s top industries.

More than a hundred Georgia counties are involved in the poultry business, which generates as much as $13 billion dollars annually.

Chinese commerce officials also say American companies unfairly benefit from government subsidies on grains used to feed chickens.

Russell says the federal government actually costs poultry producers by forcing gasoline to have ethanol, which requires corn:

“If 75–80% of producing a chicken -- the cost of which is the feed -- and most of the feed is corn, then by routing a lot of that corn into the ethanol production industry we don’t have enough corn on the open market to feed chickens and the price goes way up and that’s exactly what happened.”

Russell says because of ethanol requirements, every poultry company in the nation was losing money a year and a half ago.

U.S. Senators Johnny Isakson(R-Ga.) and Saxby Chambliss(R-Ga.) issued a joint statement Tuesday, saying: “The actions by the Chinese are unfortunate and based on a faulty interpretation of the facts.”

Sen. Chambliss said, “I find it questionable to claim the poultry industry is the recipient of subsidies. It is regrettable the Chinese are targeting this industry to express their frustration with other trade matters. This tit-for-tat action will undoubtedly lead to increase tensions, rather than lessen them.”