FSIS deems four Chinese plants eligible to ship poultry to US

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  Nadia Jasmine

  FSIS has named four Chinese poultry plants eligible to export processed poultry to the United States.

  From WATTAgNet:
  The USDA’s Food Safety and Inspection Service (FSIS) on November 5 posted the names of four establishments in China that are eligible to export processed poultry products to the United States. The four poultry processing establishments, all located in the Shangdong province, are Shangdong Delicate Food Co. (3700/03409), Weifang Legang Food Co. (3700/03435), Qingyun Ruifeng Food Co. (3700/03439) and Qingdao Nine-alliance Group Co. (3700/03447).
  The four Chinese poultry processing plants gained approval to export to the United States after FSIS conducted an audit in March, 2013. The audit found no significant deficiencies or problems with the four plants, and determined that the poultry plants in China were operating under requirements equivalent to those in the United States.
  Poultry products to be imported into the United States must be processed in countries that have been determined by FSIS to have an equivalent poultry slaughter inspection system. China is eligible to export poultry products that are fully cooked and not shelf-stable.
  After discussion and review of the export inspection certificate from China, FSIS has accepted the certificate.
  FSIS will reinspect any product exported by the four establishments when it is brought to a United States port before it will be allowed into domestic commerce.

Food safety top concern for Chinese poultry producers

She Feng, president of the China Broiler Alliance, is convinced that industrialization of the Chinese poultry industry should be promoted. 
The Chinese poultry industry is still struggling with the consequences of the past food scandals that have impacted it since 2012, but there is a light at the end of the tunnel. More than 220 poultry producers gathered September 20-21 during the 3rd International Poultry Forum China in Beijing, organized by WATT Global Media and Shanghai LyJa Cultural Media Co., to discuss solutions for this problem and many others.
Speakers at the International Poultry Forum agreed that globalization is having an impact, so they need to work harder to educate the public to eliminate misunderstandings and to raise the interest in positive advertising on behalf of the industry.
Chinese poultry industry needs to act on opportunities
But the situation goes beyond that. She Feng, general manager of Beijing Huadu Group Co. and chairman of the China Broiler Alliance (CBA), said that they were there “to discuss the Chinese broiler industry, which has shown a very rapid development in recent years.” Chicken ranks second after pork as the most- consumed meat in China, and chicken has been showing a strong demand. “Broiler producers should take advantage of this opportunity,” said She, but “we need to work out solutions to eradicate problems, fight diseases and build a new CBA.”.
Preparation for risks to poultry industry crucial
Wang Zongli, deputy director of the Animal Husbandry Department, Chinese Ministry of Agriculture, said that it is “crucial to be fully prepared for risks in the future.”
Apart from the food safety scandals, the Chinese poultry industry is also recovering from the H7N9 avian influenza scare, but there is a lot of room for improvement, and producers are hoping to accelerate the recovery.
The Chinese government is also being instrumental in this process. For instance, there is a “high investment in the Animal Disease Control Center established in 2004,” said Yang Lin, officer of the center, with enough staff for all the required tasks. The government has established animal disease control systems from production to slaughter, and it is being more cooperative with international organizations such as the World Organisation for Animal Health (OIE) and World Health Organization (WHO), among others.
Animal health is of particular interest to producers in China, since investment in veterinary medicine for one chicken is 10 times higher than in the U.S.
The industry is aware of all of the many problems that affect them, including environmental protection, export markets and consumer awareness.

US firm KKR investing in Chinese poultry company Sunner

Fujian Sunner Development (Sunner), a leading vertically integrated chicken meat producer in China, and U.S.-based global investment firm KKR have signed a definitive agreement under which KKR will invest approximately $400 million for an 18 percent stake in Sunner. KKR and Sunner will form a strategic partnership to expand the company's operations to provide safe and high-quality chicken products to Chinese consumers.
The transaction is subject to customary approvals.
Sunner is China's largest breeder, processor and supplier of chicken products, providing fresh and frozen chicken for China's fast food industry, food manufacturing industry and meat wholesale markets. Through its vertically integrated facilities, Sunner has oversight of the full production chain, ranging from chicken farming to the management of feed mills to processing, which better ensures safe and quality food products.
Fu Guangming, chairman of Sunner, said: "Chicken is the most efficient form of animal protein, and the market demand for high-quality chicken products is expected to remain strong. We are very excited to bring in a world leading investment firm such as KKR as our long-term strategic investor, as we share the same commitment to provide the best quality and safest food products to Chinese consumers. We look forward to leveraging KKR's global resources and operational expertise to further strengthen Sunner's market leadership, and to meet the growing domestic demand for healthy chicken."
The partnership is a reflection of KKR's commitment to help address the growing demand in China for a safer and more secure food supply. "Partnering with companies that meet China's demand for increased food safety is one of our key focuses for China investments. Sunner is a market leader in China's chicken farming industry. It has an experienced management team and meets the highest operating standards. We look forward to working with them by providing capital, KKR's global resources and operational expertise to further strengthen Sunner's market leadership, contribute to China's food safety initiatives and bring safe and high-quality chicken to Chinese consumers," said David Liu, member of KKR and CEO of KKR Greater China.
"Vertically integrated chicken farming is a key solution to the food safety threats facing China's animal protein sector. Sunner has an excellent track record and has thoughtfully constructed its farms and processing facilities at strategic locations to ensure chicken quality and health. It is a unique company within its industry with an outstanding management team and we look forward to partnering with Sunner as it expands its operations to meet the increasing consumer demand for safe high-quality protein," added Julian Wolhardt, member of KKR.

OSI changes business structure, management for China operations

OSI Group has made substantial changes to the organizational and management structures for its China operations. The changes were made in response to a scandal where Chinese subsidiary Husi Food Co. allegedly repackaged expired poultry and beef, then sold it with false expiration dates printed.
The new changes follow previous actions from the company, including closing the plant under investigation and removing Shanghai Husi products from the marketplace.
OSI China operations now part of OSI International
OSI’s China operations have now become part of the OSI International umbrella, said David McDonald, president and chief operating officer of OSI Group. This means the Chinese operations, now known as OSI International China, will now be embedded into the corporate organization instead of operating as a separate and decentralized entity.
New management for OSI International China
Leadership responsibilities for China operations have also been reassigned, effective immediately. The OSI International China leadership team will include experienced individuals from around the world to ensure full compliance with the OSI Group’s world-class standards for quality, stated McDonald.
“They will be complementing our existing China management team to focus on operations, quality assurance, and compliance and auditing,” said McDonald.
Leadership team members include:


• Brent Afman, senior vice president and a direct corporate employee with the company for 20 years, is managing director of Asia Pacific with responsibility for China.  Afman has been responsible previously for operations in Australia, Taiwan and two U.S. facilities.
• Michael Boccio, vice president of Further Processed Operations, is a 22-year OSI veteran and previously general manager of China operations from 1992 to 1998.  He has also been responsible previously for operations in Indonesia, the Philippines and has held various responsibilities in the U.S. Boccio will report to Afman and will be responsible for the further processing activities. The operations of Beijing, Henan, produce, human relations, and sales will report directly to him.
• Dr. B.K. Girdhar, vice president of Quality Assurance – China, has 25 years of OSI experience and will be responsible for quality systems in the company’s Further Processing and Produce businesses in China.
• Sharon Birkett, currently vice president of North America Quality, will have her duties elevated to additionally include global quality compliance and auditing. She will be responsible for enhanced surveillance of quality compliance in China.
OSI steps up auditing activities
In addition to implementing structural and managerial changes, OSI will assign a vigilant rotation of global experts to continuously survey these operations and implement exhaustive audit steps, which McDonald says will include constant visual surveillance and extensive employee interviews that concretely identify not only critical production measures and document compliance, but actual visual confirmation through extended observation.
OSI food safety education campaign coming
To promote the awareness for food safety among the Chinese public, OSI Group will create a 3-year, OSI food safety education campaign in China. The company will share more details on the campaign in the near future.

Alltech VP predicts bright future for Chinese poultry industry

China is experiencing history's largest and, likely, fastest ever urban shift with more than 300 million Chinese people moving to big cities. A new, empowered middle class is rising up with higher incomes, strong educations and a desire to better understand the food chain. Social media and recent food scandals have been putting pressure on the Chinese government to better manage and make fundamental changes. Meanwhile, Chinese poultry producers must increase their production efficiency to meet the increasing demand.
Dr. Mark Lyons, vice president corporate affairs at Alltech, presented his vision for the China poultry industry at the recent 2013 International Poultry Forum in Beijing.

The rising Chinese middle class
Today's Chinese customers are becoming more conscious of what they eat; higher quality, safe, traceable and tasty meat products are more important than ever in the Middle Kingdom. But who are these consumers? As Lyons described, they are young, educated Chinese people building a strong middle class in the huge country. These people are SMARTTM*, are living in cities and are willing to pay more for quality. And, this new generation is intensively using social media to express their concerns about the Chinese food safety.

Scandals that hit the market
Recent Chinese food scandals continue to pressure the meat industry to change the way it looks at animal production. Companies such as KFC have strongly suffered from the traceability scandal that exploded less than a year ago when the Chinese state-owned CCTV stated in a report that Yum! Brands (corporate owner of KFC) chicken were fed with chemicals and treated with antibiotics. Just as the case began to fade, the Chinese industry was hit by influenza and other health challenges at farm level.  The financial loss that H7N9 caused this year is estimated to be well over RMB 40 billion. Consumers reduced their poultry consumption, the live bird markets closed in many areas and day-old chick and live-bird prices fell significantly.

Crisis management
As David Byrne, former EU commissioner for health and food safety, said, there are two types of companies: those that already had a crisis and those that will. Several examples from the last decade showed that most of the Chinese companies are not prepared for handling crisis. Lyons urged the industry players to have crisis management plans. As he described, every organization has to have a person or select crisis management group who is in charge of making quick decisions and communicating effectively both within the organization and outside.

The power of social media
Besides the recent food scandals, Chinese social media has been playing a vital role in the shifting consumer landscape. Sina Weibo, QQ, Qzone, WeChat and yokou are popular social media sites that are connecting close to a billion people in China. The influence of Chinese social media is so powerful that, according to a recent study, close to 40 percent of Chinese people (ages 18-34) look for information on social media before they make decisions on product purchases. In the case of last year's KFC issue, the negative story spread immediately through social media, resulting in an immediate drop in KFC's sales in the country and forcing the company to take action.

Strengthening control by the government
Chinese customers are putting increasing pressure on the government to take action and introduce stricter legislation in food safety. The Chinese State Council, for instance, implemented a national-level quality control blueprint for Chinese companies in 2012, which stressed the importance of building a strong country with high product quality by 2020.
According to the Chinese government's National Animal Husbandry Development's Five-Year Plan, more than 95 percent of feed products should meet their specifications: undesirable and/or forbidden additives in the feeds being detected must be lower than 0.1 percent; fresh milk collection stations must register with an official certificate; and the standardized supervision and safety insurance system of fresh milk processing must be realized.

Conclusions 
"Will this year be a horrible year for us or the year we put our business into another gear?" questioned Lyons. He then challenged the audience with six ideas:

1. Improved capital efficiency -- Invest your money in profitable businesses
2. Improved productivity -- Use new technologies for more efficient animal production
3. Rationalized supply chains -- Effective vertical integration is key
4. Proactive response to consumers' demands -- Create branded functional meat products
5. Develop human capital: talented leaders for the future -- Identify and support talents
6. New world class innovation -- Have your unique technology
Lyons sees the future as bright for the poultry industry. He forecasts that meat prices will have a mild recovery when disease ends due to high inventory of frozen chicken. In the short term, China's economic growth is expected to return to eight percent in 2013, which will greatly support poultry consumption as institutional buyers may increase poultry purchases and QSR sales may improve. Overall, China's poultry market will remain stable in the coming year, said Lyons.

Chinese animal feed sales on road to recovery?

Sales of poultry products in China may be showing some signs of recovery as fears over avian influenza H5N9 are calmed, and this is feeding through to improved sales of poultry feed.
The change in consumer behavior could represent the beginning of the end of a difficult period for China's feed producers. Feed sales have been slowing in the country since mid-2012, due to a high combination of high input costs and low animal protein prices. Over the first three months of this year, for example, China's imports of soybean meal, at 11.49 million metric tons, was 13.4 percent lower.
The avian influenza outbreak has exacerbated problems. Since the crisis, demand for soybean meal has dropped by 8-10 percent. Many companies have been forced to offer discounts or special promotions, as demand from poultry producers declined and inventories ran down.
For 2012, the China Feed Industry Association notes that country produced 171.7 million metric tons of compound feed. Despite the recent glimmer of an upturn, total feed production is expected to be 20 percent lower in 2013.

Marfrig to invest $309 million in China poultry operations, logistics

Brazilian meat packer Marfrig Alimentos SA will invest $309 million in implementing vertical integration in Chinese poultry operations and creating a multi-temperature logistics company in China, according to reports.
The joint ventures, which will be carried out with Chinwhiz and Cofco LTDA, respectively, will be handled through Marfrig's international arm, Keystone Foods. "With these investments, Marfrig will be strategically positioned to meet the growing demand for food in the Chinese market, with operations that range from processing to distribution to clients," said the company in a statement. "The investment is also consistent with the company's strategy of focusing on its financial sustainability over the long term, which will contribute to consistent cash generation."

USDA extends use of methionine in organic poultry production

The United States Department of Agriculture's National Organic Program has extended the use of methionine in organic poultry production.
The interim rule takes effect on October 1, 2010 and will remain in place until October 1, 2012. The maximum allowable limits of methionine per ton of feed are: 4 pound for layers, 5 pounds for broilers and 6 pounds for turkeys and all other poultry. The rule is open for comments until October 25, 2010.

US ban of Chinese poultry violates rules, says WTO

A preliminary report from the World Trade Organization (WTO) says the U.S. has violated WTO rules in banning Chinese poultry imports, according to a Xinhua News Agency report sourced in China Daily. The move goes against the WTO’s Sanitary and Phytosanitary Measures, or the SPS Agreement, which governs food safety, and breaches most-favored-nation rules in singling out China.
The U.S. ban resulted from a provision in the Omnibus Appropriations Act of 2009. China protested the ban to the WTO in April 2009. A majority of the WTO experts examining the issue favored China, according to reports, but the U.S. can appeal the decision.

More than 100K hens suffocate from tampered controls

The BBC reports approximately 136,000 hens died when a poultry farm near Edinburgh, Scotland, was broken into and environmental controls tampered with in August.
Officials say the air supply to 12 poultry sheds was turned off, leaving the birds to suffocate. They do not believe the crime, which occurred at Beechgrove Farm, was the work of animal rights activists.
Total worth of the hens was put at £400,000.

Official meets with Irish egg industry

Irish Parliament member and Minister of Agriculture and Rural Development, Michelle Gildernew, met with Irish egg producers, say reports. The meeting’s purpose was to talk through the challenges facing the industry given the coming EU ban on conventional hen cages.
The ban was announced in 1999 and will be enforced beginning in 2012.
Gildernew encouraged egg producers to meet with their bankers regarding the transitional costs, and said her office would continue to support the industry through the Processing and Marketing Grant Scheme. She also pledged to write to the EU Commission asking for a new marketing code to differentiate between eggs from hens in enriched systems and those in conventional cages.

Russia: 2010 import quotas for poultry, pork may decrease

Russia's Economic Development Ministry has indicated Russia could reduce its import quotas for both poultry and pork in 2010, while leaving the quota for beef basically unchanged as compared to 2009.
The matter will be discussed at a coming meeting of the government commission on customs and tariffs. The setting of specific quotas for individual countries and duty rates for imports within and above quotas will be continued, according to the Interfax news agency.

Bill to help dairy, allow Chinese chicken imports

According to reports, legislators in Washington, D.C., are considering an appropriations measure that contains emergency aid to dairy farmers and lifts an import ban of two years on Chinese poultry.
The agreement would give $290 million to dairy farmers and also authorize USDA to buy $60 million in cheese and other dairy products to reduce surpluses.If passed, Chinese poultry that meets this country’s safety standards could again be imported.

CP Group to invest $1.2 billion in North China

Thailand's Charoen Pokphand Group (CP Group) and the Chinese government signed a deal on September 8 worth 7.9 billion Yuan (US$1.2 billion) for a food project in North China.
Under the deal, three integrated operations — a hen project with 3 million birds in stock, a broiler project with a 100-million-bird annual output and a hog project with 1 million head of annual production — will be built in Changchun, the capital of Jilin province, Li Yang, the company executive in charge of the project, told Poultry International.
Currently, CP Group is working with the Jilin authorities for a detailed plan, and is expected to launch the project this year, according to Li.
"After producing, we will sell shell eggs and pork across China in order to meet rising domestic demand," Li said. "While, for our broiler meat, 60-70% of them will be exported to Europe and Japan as cooked products, and the rest will be sold in China as fresh meat," he added.
Li also mentioned that the company may provide live pigs to China's leading slaughtering facilities such as Henan-based Shine way Group. But long-term, CP Group is eager to develop its own pork products.

China top global meat producer

Last year China produced 29% of the global meat output, China Daily recently reported.
The country's meat production was 72.69 million tons last year, an increase over the previous year of 6%.
Pork took the top slot in production, with 63.5% of output.
China also imported 1.84 million tons of meat in 2008.