Required Report - public distribution

**Date:** 3/1/2008

**GAIN Report Number:** CH8013

CH8000

**China, Peoples Republic of**

**Poultry and Products**

**Semi-Annual Report**

**2008**

**Approved by:**

![](media/image1.wmf)William Westman

AgBeijing

**Prepared by:**

Jianping Zhang & Eric Trachtenberg

**Report Highlights:**

FAS Beijing forecasts China's broiler meat production to increase by
nine percent to 12.5 MMT. China's broiler production in 2007 increased
by 12 percent to 11.5 MMT from the previous year because of a major
decline in pork production caused by blue ear disease. China\'s boiler
imports in 2008 are forecast to increase by 24 percent to 600,000 MT
while exports are forecast to increase by 12 percent to 400,000 MT.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Beijing \[CH1\]

\[CH\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Broiler Production Keeps Rising 3](#broiler-production-keeps-rising)

[20-Year Production Trends 4](#year-production-trends)

[Broilers Stay Cheaper than Pork 4](#broilers-stay-cheaper-than-pork)

[Consumption 5](#consumption)

[20-Year Consumption Trends 5](#year-consumption-trends)

[Trade 6](#trade)

[Record Imports, Sanitary Problems Remain
6](#record-imports-sanitary-problems-remain)

[Rising Turkey Meat Imports, A Non-Traditional Product
6](#rising-turkey-meat-imports-a-non-traditional-product)

[Rising Exports 7](#rising-exports)

[Poultry Eggs Stable 7](#poultry-eggs-stable)

[Other Relevant Reports 7](#other-relevant-reports)

[FAS Beijing Reports 7](#fas-beijing-reports)

[Broiler PS&D Table 8](#broiler-psd-table)

[Broiler Trade Matrix 9](#broiler-trade-matrix)

# Executive Summary

FAS Beijing forecasts China's broiler production in 2008 to increase by
nine percent to 12.5 MMT because of strong local demand. Interest in
broiler meat is expected to stay high because of a continuing pork
shortage and resulting high prices. The expected slow recovery in the
swine sector will likely keep prices high, encouraging the consumption
of broiler meat as consumers substitute poultry meat for pork.

Strong demand, high prices, and the strong Renminbi are also expected to
push China's 2008 boiler meat imports up by 24 percent to 600,000 MT.
Poultry meat imports are also expanding beyond broilers. In 2007, China
imported increasing volumes of turkey meat, a non-traditional product.
Imports rose dramatically from 12,191 MT in 2005 to 29,808 MT, a 145
percent increase. Industry sources believe this change was the result of
larger numbers of foreigners living in China and the increasing
influence of western cuisine among the younger Chinese.

China's 2008 broiler exports are forecast to increase by 12 percent to
400,000 MT because of increased demand in export markets. Around 90
percent of exports go to Japan, Hong Kong, and South Korea.

China's ban on imports of poultry products from seven U.S. states with
past Low Pathogenic Avian Influenza (LPAI) outbreaks may not be lifted
in 2008 (Please see CH7077 for detailed information). Resolution of LPAI
and other important trade issues has been linked with market access for
exports of China's cooked poultry to the United States.

Note: No data included in this report is official. All official USDA
data is available at *http://www.fas.usda.gov/psdonlineonline*).

# Production

## Broiler Production Keeps Rising 

FAS Beijing forecasts broiler meat production in 2008 to increase by
nine percent to 12.5 MMT. This change came on the heels of a 12 percent
increase in 2007 to an estimated 11.5 MMT. This sharp increase came
because of a sharp decline in pork production caused by swine blue ear
disease. The disease struck during the second half of 2006 and the first
half of 2007, causing a considerable shortfall in overall meat supplies.
As the second most preferred animal protein in China, broiler meat is an
important substitute when pork prices are high. Post expects broiler
meat to continue as the main substitute for pork in 2008 since swine
production is only expected to recover slowly.

The growth rate in China's broiler meat production is expected to be
below 2007's feverish pace because broiler farms were hard hit by the
worst snowstorms in the last 50 years. According to the Ministry of
Agriculture (MOA), at the end of January and beginning of February 2008,
25 provinces in China were hit by the snowstorms that caused 129 human
deaths and resulted in economic losses totaling RMB 151.7 billion
(\$21.4 billion). On February 19, MOA reported in its *Work Plan to
Resume and Develop Livestock Production After Disasters* that as of
February 14, the snow storms killed 63.1 million birds and interfered
with operations in major broiler producing provinces such as Guangdong,
Henan, and Jiangsu.

The increase in broiler production will also likely be slowed by higher
production costs. High commodity prices have had an important effect in
addition to rising prices for water, electricity, energy,
transportation, and increasing workers' salaries. Other escalating costs
include animal disease control and environmental protection.

While labor was not traditionally an important cost in China's rural
areas, this is no longer true because mass migration is shrinking the
labor pool. According to the second national agriculture census
published by the National Statistics Bureau (NSB) on February 21, 2008,
more than 131.8 million rural laborers moved to urban areas by the end
of the 2006 \-- with male labor accounting for 64 percent of the total.
In addition, China's new Labor Contract Law became effective on January
1, 2008. This law may attract even more rural labors to urban areas
because it mandates a package of benefits and salaries that farms have
difficulty matching. The law also requires employers to provide proper
benefits and salaries, which will increase production costs further.
Even for those who stay on the farm, paid work in the village is more
attractive than farming. In some regions, more than half of rural income
now comes from off-farm sources. The coming labor shortage could become
an important bottleneck in the development of the poultry sector.

On January 18, 2008, the National Statistics Bureau announced that
China's PPI in January was up 7.1 percent compared with a year ago. This
was the largest monthly rise in three years. Prices increased for water,
electricity, transportation, energy, and labor because of inflation.
High production costs combined with the strong Renminbi could make
Chinese broiler products less competitive in the international market in
the next couple of years while encouraging large imports. On the other
hand, a strong Renminbi should work against inflation by making imports
less expensive for Chinese consumers.

Another uncertainty is the possibility of future outbreaks of highly
pathogenic avian influenza (HPAI). From January to February 2008, there
were three outbreaks of human infection with HPAI and all of them died.
Also, there were three outbreaks of HPAI on poultry farms, two in Tibet
(culled 13,000 and 7,600 birds respectively), and one in Guizhou
Province (culled 230,000 birds). The HPAI situation will continue to be
a wild card in both the production and consumption of all poultry meat.

## 20-Year Production Trends

Total poultry meat production has risen more than ten-fold over the last
20 years. In 1986 it totaled 1.49 MMT while in 2006 it was 15.1 MMT.
Although pork still remains China's most widely consumed meat, poultry
production has benefitted from lower costs compared to swine, a faster
reproduction cycle, and earlier modernization that reduced the number of
backyard farms. Some of the most modern facilities are very large. For
example, the Xinchang Company in Shandong is building a new processing
plant with a daily slaughter capacity at 300,000 birds, which will be 50
percent of Tyson's slaughter in the United States. FAS Beijing expects
that the poultry sector will continue to be the most modern and capital
intensive meat sector in China.

## 

## Broilers Stay Cheaper than Pork

China's average year-on-year wholesale broiler price in 2007 climbed 31
percent to US\$1.30 per kilogram while the live chicken price went up by
39 percent to \$1.45 per kilogram. At the same time, the average
year-on-year pork price in 2007 raced up 56 percent to \$2.21 per
kilogram because of short supplies. Broiler prices have stayed below
pork prices because of a large increase in broiler production resulting
from reduced HPAI outbreaks in 2007. At the same time, relatively stable
feed corn supplies have kept broiler prices lower, although broiler
prices have increased because of inflation and extra demand caused by
substitution from pork. FAS Beijing forecasts that China's 2008 broiler
prices will likely remain high but stable during the first half of 2008
with a slight easing possible as pork supplies slowly improve in the
latter half of the year.

With more than 130 million mostly poor urban migrants who spend almost
half their income on food, the Chinese Government is concerned that
escalating meat prices will lead to instability. In response to higher
meat prices, the National Development and Reform Commission (NDRC),
China's top economic planner, announced in mid January 2008 to mandatory
price caps on a range of products, including grain, edible oils, meat,
milk, and eggs. Food producers have to apply for verification and
approval by the government for any new price hikes. At the same time,
China is expected to put more imported meat from strategic reserves on
the market to curb meat prices and support consumption.

![](media/image2.wmf){width="6.4375in" height="2.953472222222222in"}

## 

# Consumption

## 20-Year Consumption Trends

Increased incomes have increased meat consumption and changed the market
shares for different meats. Over the last couple decades, pork has
slowly lost market share to other meats. For example, pork accounted for
85 percent of meat consumption in 1986, while making up only 65 percent
in 2006. Broiler meat accounted for eight percent in 1986, but increased
to 13 percent in 2006. Per capita poultry consumption was 1.13 kilograms
in 1984, and it was 11.2 kilograms in 2006. Per capita broiler meat
stands at 8 kilograms per capita. As a result, poultry meat is the
second largest meat protein source after pork. The local industry
believes that in the last ten years, poultry consumption increased 20
percent year-on-year because of the development of fast food restaurants
in China such as KFC and McDonalds. In the years to come, demand for
different kinds of meat will likely move back and forth depending on
prices or outbreaks of animal diseases.

FAS Beijing forecasts China's broiler consumption in 2008 to increase by
eight percent to 12.7 MMT because of increased domestic production and
large imports. Since Chinese consumers are price-sensitive, many of them
turned to poultry meat when pork prices were high. In order to support
meat consumption, the government imposes prices caps on major food
products while providing poor consumers with RMB 20-30 (\$2.9 - 4.3) per
month per person to buy meat for about six months. Live chickens sold on
the markets of agricultural produce to individual families are normally
local breed yellow-feathered chicken (for all kinds of menus), black
chicken (for soup), or spent hens (for soup). Native brand"San Huang"
chicken prices are higher than Western chicken breeds because buyers
believe that have a more fragrant smell and taste compared with western
breed broilers that are mainly sold to restaurants, lunch box companies,
cafeterias at schools, organizations, and the military.

Outside volume increases, there is another significant change in meat
consumption caused by people moving off the farm. In the past, thousands
of family households had backyard hogs for self sufficiency. After many
backyard operations closed because of blue ear disease and other
problems, those farmers who formerly consumed their own products now
need to buy meat on the market. This means more meat will be traded
formally as opposed to the past practice of on-farm consumption or
small-scale cash sales in a nearby village.

# Trade

## Record Imports, Sanitary Problems Remain 

FAS Beijing forecasts China's broiler meat imports in 2008 to increase
by 24 percent to 600,000 MT from the previous year's 482,000 MT
(ready-to-cook weight). Chicken paw imports are expected to increase by
one-third to 723,600 MT from the previous years' 544,088 MT. These
totals include both direct shipments and Hong Kong re-exports to the
mainland.

China's broiler imports are the largest source of imported meat. China's
total imports (broiler meat and chicken paws) in 2007 from the world
were valued at nearly \$926.2 million while imports from the United
States were valued at nearly \$558.6 million. These strong imports are
not likely to fall. Chicken paw imports account for nearly 50 percent of
China's total broiler imports. The short domestic meat supply and strong
Chinese interest in eating chicken paws will likely continue drive
imports up in 2008.

China bans imports from seven U.S. States because of low pathogenic
avian influenza (LPAI) reported in FAS Beijing's last annual poultry
report CH7077. Although China's ban may be contrary to OIE standards,
negotiations continue. Resolution of this issue and other important SPS
trade issues has been linked with market access for exports of China's
cooked poultry exports to the United States -- an issue that remains
unresolved. Although FAS Beijing does not expect major trade disruptions
in the short-term, failure to resolve outstanding sanitary issues
probably means that U.S. exports will continue to face problems at the
border.

## Rising Turkey Meat Imports, A Non-Traditional Product 

In 2007, China's turkey imports, a non-traditional meat product,
increased from 12,191 MT valued at \$10.2 million in 2005 to 29,808 MT
valued at \$27.9 million. Turkey products are mainly consumed by
foreigners resident in China or tourists. At the same time, supermarkets
in large cities start have started selling cooked turkey parts, such as
wings or legs, for Chinese consumers. Unlike the United States, the
Chinese do not buy whole birds since they do not like breast meat. Those
Chinese who lived abroad before are part of the consumers are also part
of this trend. The rising consumption among younger generation is also
influenced by the western traditions, such as the Thanksgiving. Since
China's turkey production is almost nil, China also imports turkey meat
to satisfy consumer demand.

## Rising Exports

FAS Beijing forecasts China's broiler meat exports in 2008 to increase
by 12 percent to 400,000 MT. Japan is expected to continue be China's
top export market followed by Hong Kong and South Korea, with all three
countries accounting for 90 percent of China's total exports. Cooked
products will remain the backbone products as last year. To protect
China's poultry export interests, both AQSIQ (in \[2007\] No. 212
document) and MOA have imposed strict requirements for poultry raising,
processing, and management for exported products. One of the major
reasons why China has been especially strict with exports is its
interest in securing export markets overseas. This not only can bring
increased revenue for Chinese firms, but also sends the message to
Chinese consumers that the product they buy from local firms is safe.

## Poultry Eggs Stable

FAS Beijing (Post) forecasts China's total poultry egg production in
2008 to increase by two percent to 31.1 MT from estimated 30.3 MT in
2007. Most eggs consumed are fresh-shelled table eggs. Only a very small
volume of eggs is processed or preserved. China's imports of fresh eggs
are nil. Its exports are mainly to Hong Kong and Macau.

# Other Relevant Reports

## FAS Beijing Reports

[CH7077 -- Poultry
Annual](http://www.fas.usda.gov/gainfiles/200709/146292545.doc)

[CH7062 -- China Bans Virginia
Poultry](http://www.fas.usda.gov/gainfiles/200708/146292053.doc)

[CH7034 - China Bans West Virginia
Poultry](http://www.fas.usda.gov/gainfiles/200704/146280976.doc)

[CH7006 - Chicken Paw, Wing and Wing Tip Exports to
China](http://www.fas.usda.gov/gainfiles/200702/146280147.doc)

## Broiler PS&D Table

<table>
<colgroup>
<col style="width: 20%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PSD Table</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="3"><strong>China, Peoples Republic of</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="2"><strong>Poultry, Meat, Broiler</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3">(MIL HEAD)(1000 MT)(PERCENT)</td>
</tr>
<tr class="even">
<td></td>
<td>2006</td>
<td>Revised</td>
<td></td>
<td>2007</td>
<td>Estimate</td>
<td></td>
<td>2008</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>01-2006</td>
<td>01-2006</td>
<td></td>
<td>01-2007</td>
<td>01-2007</td>
<td></td>
<td>01-2008</td>
<td>01-2008</td>
</tr>
<tr class="odd">
<td>Inventory (Reference)</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Slaughter (Reference)</td>
<td>7640</td>
<td>7640</td>
<td>7640</td>
<td>8000</td>
<td>8000</td>
<td>8519</td>
<td>8444</td>
<td>8444</td>
<td>9259</td>
</tr>
<tr class="odd">
<td>Beginning Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Production</td>
<td>10350</td>
<td>10350</td>
<td>10350</td>
<td>10850</td>
<td>10850</td>
<td>11500</td>
<td>11400</td>
<td>11400</td>
<td>12500</td>
</tr>
<tr class="odd">
<td>Whole, Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Parts, Imports</td>
<td>343</td>
<td>343</td>
<td>343</td>
<td>513</td>
<td>513</td>
<td>482</td>
<td>560</td>
<td>560</td>
<td>600</td>
</tr>
<tr class="odd">
<td>Intra-EU Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Other Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Imports</td>
<td>343</td>
<td>343</td>
<td>343</td>
<td>513</td>
<td>513</td>
<td>482</td>
<td>560</td>
<td>560</td>
<td>600</td>
</tr>
<tr class="even">
<td>Total Supply</td>
<td>10693</td>
<td>10693</td>
<td>10693</td>
<td>11363</td>
<td>11363</td>
<td>11982</td>
<td>11960</td>
<td>11960</td>
<td>13100</td>
</tr>
<tr class="odd">
<td>Whole, Exports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Parts, Exports</td>
<td>322</td>
<td>322</td>
<td>322</td>
<td>353</td>
<td>353</td>
<td>358</td>
<td>390</td>
<td>390</td>
<td>400</td>
</tr>
<tr class="odd">
<td>Intra EU Exports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Other Exports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Exports</td>
<td>322</td>
<td>322</td>
<td>322</td>
<td>353</td>
<td>353</td>
<td>358</td>
<td>390</td>
<td>390</td>
<td>400</td>
</tr>
<tr class="even">
<td>Human Consumption</td>
<td>10371</td>
<td>10371</td>
<td>10371</td>
<td>11010</td>
<td>11010</td>
<td>11724</td>
<td>11570</td>
<td>11570</td>
<td>12700</td>
</tr>
<tr class="odd">
<td>Other Use, Losses</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Total Dom. Consumption</td>
<td>10371</td>
<td>10371</td>
<td>10371</td>
<td>11010</td>
<td>11010</td>
<td>11724</td>
<td>11570</td>
<td>11570</td>
<td>12700</td>
</tr>
<tr class="odd">
<td>Total Use</td>
<td>10693</td>
<td>10693</td>
<td>10693</td>
<td>11363</td>
<td>11363</td>
<td>12082</td>
<td>11960</td>
<td>11960</td>
<td>13100</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>10693</td>
<td>10693</td>
<td>10693</td>
<td>11363</td>
<td>11363</td>
<td>12082</td>
<td>11960</td>
<td>11960</td>
<td>13100</td>
</tr>
<tr class="even">
<td>CY Imp. from U.S.</td>
<td>254</td>
<td>254</td>
<td>249</td>
<td>297</td>
<td>297</td>
<td>343</td>
<td>340</td>
<td>340</td>
<td>403</td>
</tr>
<tr class="odd">
<td>CY Exp. to U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Balance</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>100</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Inventory Balance</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Production Change</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>5</td>
<td>5</td>
<td>11</td>
<td>5</td>
<td>5</td>
<td>9</td>
</tr>
<tr class="odd">
<td>Import Change</td>
<td>57</td>
<td>57</td>
<td>57</td>
<td>50</td>
<td>50</td>
<td>41</td>
<td>9</td>
<td>9</td>
<td>24</td>
</tr>
<tr class="even">
<td>Export Change</td>
<td>-3</td>
<td>-3</td>
<td>-3</td>
<td>10</td>
<td>10</td>
<td>11</td>
<td>10</td>
<td>10</td>
<td>12</td>
</tr>
<tr class="odd">
<td>Trade Balance</td>
<td>-21</td>
<td>-21</td>
<td>-21</td>
<td>-160</td>
<td>-160</td>
<td>-124</td>
<td>-170</td>
<td>-170</td>
<td>-200</td>
</tr>
<tr class="even">
<td>Consumption Change</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>6</td>
<td>6</td>
<td>13</td>
<td>5</td>
<td>5</td>
<td>8</td>
</tr>
</tbody>
</table>

## Broiler Trade Matrix

  ------------------ ------------- ------------- ------------- ------------
  China Broiler Meat                                           
  Direct Imports,                                              
  2005-2007 (Metric                                            
  Tons)                                                        

                                                               \% Change

                     Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                     Quantity      Quantity      Quantity      Quantity

                     2005          2006          2007          2007/06

  World              370,873       572,218       773,639       35.20

  United States      196,659       390,748       508,143       30.04

  Brazil             142,872       142,812       163,388       14.41

  Argentina          24,188        27,702        102,090       268.53

  Chile              2,502         9,044         0             -100.00

  France             1,659         1,266         3             -99.76

  Philippines        59            488           0             -100.00

  Canada             2,758         150           0             -100.00

  Thailand           122           0             0             0.00

  Other              54            8             15            87.50

  HS Code: 020711,                                             
  020712, 020713,                                              
  020714 and 160232                                            

  Note: China                                                  
  chicken paw                                                  
  imports under HS                                             
  Code 02071422 is                                             
  included in this                                             
  table,                                                       

  but excluded in                                              
  the PS&D table.                                              

  Source: GTA China                                            
  Customs Statistics                                           
  ------------------ ------------- ------------- ------------- ------------

  ------------------ ------------- ------------- ------------- ------------
  China Chicken Paw                                            
  Direct Imports,                                              
  2005-2007 (Metric                                            
  Tons)                                                        

                                                               \% Change

                     Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                     Quantity      Quantity      Quantity      Quantity

                     2005          2006          2007          2007/06

  World              189,178       289,171       396,331       37.06

  United States      103,211       156,974       221,373       41.03

  Brazil             60,724        98,851        93,986        -4.92

  Argentina          23,138        26,907        80,972        200.93

  Chile              2,034         6,439         0             -100.00

  Other              71            0             0             0.00

  HS Code: 020714.22                                           

  Source: GTA China                                            
  Customs Statistics                                           
  ------------------ ------------- ------------- ------------- ------------

  ------------------ ------------- ------------- ------------- ------------
  Hong Kong Broiler                                            
  Re-Exports to                                                
  China, 2005-2007                                             
  (Metric Tons)                                                

                                                               \% Change

                     Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                     Quantity      Quantity      Quantity      Quantity

                     2005          2006          2007          2007/06

  World              105,503       177,393       252,769       42.49

  Brazil             43,202        113,420       184,222       62.42

  United States      41,937        38,682        29,197        -24.52

  Argentina          5,284         11,454        13,996        22.19

  Canada             404           273           4,418         1518.32

  France             728           932           2,734         193.35

  Poland             0             96            2,515         2519.79

  Netherlands        299           52            2,515         4736.54

  Chile              5,068         7,720         2,386         -69.09

  Australia          104           48            1,511         3047.92

  Iran               3,710         2,352         1,294         -44.98

  United Kingdom     268           199           1,175         490.45

  Germany Fed Rep    210           126           1,003         696.03

  Other              4,603         2,309         5,830         152.49

  HS Code: 020711,                                             
  020712, 020713,                                              
  020714 and 160232                                            

  Note: Chicken paw                                            
  re-exports to                                                
  China under HS                                               
  Code 02071410 is                                             
  included in this                                             

  table, but                                                   
  excluded in the                                              
  PS&D table.                                                  

  Source: WTA from                                             
  Hong Kong Census                                             
  and Statistics                                               
  Department                                                   
  ------------------ ------------- ------------- ------------- ------------

  ------------------ ------------- ------------- ------------- ------------
  Hong Kong Chicken                                            
  Paw Re-Exports to                                            
  China, 2005-2007                                             
  (Metric Tons)                                                

                                                               \% Change

                     Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                     Quantity      Quantity      Quantity      Quantity

                     2005          2006          2007          2007/06

  World              68,407        117,087       147,757       26.19

  Brazil             24,223        74,345        107,059       44.00

  United States      27,803        23,658        18,999        -19.69

  Argentina          4,987         11,112        12,751        14.75

  Chile              3,630         4,731         1,717         -63.71

  France             157           0             1,281         0.00

  Poland             0             0             1,228         0.00

  Australia          0             0             1,016         0.00

  Iran               3,710         1,947         972           -50.08

  Netherlands        0             75            532           609.33

  Canada             176           23            270           1073.91

  Turkey             3,215         0             135           0.00

  Other              506           1,271         1,797         41.38

  HS Code: 020714.22                                           

  Source: WTA Hong                                             
  Kong Census and                                              
  Statistics                                                   
  Department                                                   
  ------------------ ------------- ------------- ------------- ------------

  ------------------ ------------- ------------- ------------- ------------
  China Broiler Meat                                           
  Exports, 2005-2007                                           
  (Metric Tons)                                                

                                                               \% Change

                     Jan-Dec       Jan-Dec       Jan-Dec       Jan - Dec

                     2005          2006          2007          2007/06

  World              331,524       321,761       358,053       11.28

  Japan              178,411       196,282       204,384       4.13

  Hong Kong          88,569        91,892        106,871       16.30

  Korea South        8,673         12,320        11,767        -4.49

  Malaysia           387           201           9,870         4810.45

  Bahrain            4,272         4,821         4,078         -15.41

  Iraq               2,062         1,593         3,715         133.21

  Macau              1,739         2,001         2,848         42.33

  Azerbaijan         2,847         0             2,371         0.00

  Kyrgyzstan         0             0             1,650         0.00

  South Africa       0             235           1,643         599.15

  Aruba              630           933           986           5.68

  Armenia            1,969         96            898           835.42

  Somalia            3,796         1,323         778           -41.19

  Kenya              293           1,170         579           -50.51

  United States      4,154         3,027         476           -84.27

  Georgia            1,873         406           362           -10.84

  Albania            5,430         545           354           -35.05

  Singapore          1,483         1,409         329           -76.65

  Maldives           652           1,021         0             -100.00

  Moldova            8,237         0             0             #DIV/0!

  Korea North        5,003         0             0             #DIV/0!

  Mozambique         2,592         0             0             #DIV/0!

  Uzbekistan         1,267         0             0             #DIV/0!

  Other              7,185         2,486         4,094         64.68

  HS Code: 020711,                                             
  020712, 020713,                                              
  020714 and 160232                                            

  Note: No exports                                             
  of chicken paws                                              

  Source: GTA China                                            
  Customs Statistics                                           
  ------------------ ------------- ------------- ------------- ------------

  ---------------- ----------- ---------- -------- -------- ---------------
  China Wholesale                                           
  Broiler Meat                                              
  Prices on                                                 
  Average,                                                  
  2004-2007                                                 
  (US\$/KG)                                                 

                                                            \% Change

                   2004        2005       2006     2007     2007/2006

  January          1.01        1.03       0.93     1.14     22.58

  February         0.92        1.03       0.94     1.18     25.53

  March            0.97        1.11       0.90     1.20     33.33

  April            0.96        1.10       0.90     1.31     45.56

  May              0.95        1.12       0.92     1.26     36.96

  June             0.98        1.11       0.89     1.40     57.30

  July             1.05        1.05       0.93     1.39     49.46

  August           1.09        1.06       1.00     1.45     45.00

  September        1.12        1.09       1.08     1.39     28.70

  October          1.13        1.01       1.13     1.31     15.93

  November         1.06        0.92       1.16     1.29     11.21

  December         0.97        0.91       1.12     1.31     16.96

  Source: The                                               
  Ministry of                                               
  Agriculture                                               
  ---------------- ----------- ---------- -------- -------- ---------------

  ---------------- ----------- ---------- -------- -------- ---------------
  China Wholesale                                           
  Live Chicken                                              
  Prices on                                                 
  Average,                                                  
  2004-2007                                                 
  (US\$/KG)                                                 

                                                            \% Change

                   2004        2005       2006     2007     2007/06

  January          1.10        1.13       0.87     1.27     45.98

  February         1.02        1.17       1.11     1.24     11.71

  March            0.98        1.21       1.00     1.21     21.00

  April            1.07        1.28       1.02     1.23     20.59

  May              1.13        1.33       0.98     1.47     50.00

  June             1.18        1.20       0.95     1.62     70.53

  July             1.21        1.16       0.91     1.70     86.81

  August           1.24        1.18       1.04     1.74     67.31

  September        1.22        1.22       1.03     1.63     58.25

  October          1.21        1.08       1.23     1.45     17.89

  November         1.17        0.98       1.22     1.48     21.31

  December         1.22        0.97       1.17     1.37     17.09

  Source: The                                               
  Ministry of                                               
  Agriculture                                               
  ---------------- ----------- ---------- -------- -------- ---------------

  ---------------- ----------- ---------- -------- -------- ---------------
  China Wholesale                                           
  Chicken Egg                                               
  Prices on                                                 
  Average,                                                  
  2004-2007                                                 
  (US\$/KG)                                                 

                                                            \% Change

                   2004        2005       2006     2007     2007/06

  January          0.63        0.69       0.58     0.70     20.69%

  February         0.55        0.68       0.57     0.77     35.09%

  March            0.60        0.64       0.54     0.73     35.19%

  April            0.58        0.64       0.54     0.79     46.30%

  May              0.59        0.72       0.54     0.81     50.00%

  June             0.66        0.71       0.55     0.80     45.45%

  July             0.67        0.71       0.59     0.78     32.20%

  August           0.74        0.74       0.65     0.86     32.31%

  September        1.92        0.72       0.74     0.87     17.57%

  October          0.71        0.67       0.72     0.83     15.28%

  November         0.68        0.62       0.74     0.80     8.11%

  December         0.68        0.61       0.75     0.77     2.67%

  Source: The                                               
  Ministry of                                               
  Agriculture                                               
  ---------------- ----------- ---------- -------- -------- ---------------

  --------------- -------------------- ------ ------ ------ ------ ------ ------ ------ ------ ---------
  China Import                                                                                 
  M.F.N Tariff                                                                                 
  Rate on Frozen                                                                               
  Chicken                                                                                      
  Products,                                                                                    
  2001-2008 Based                                                                              
  on Weight                                                                                    

  (Unit: RMB/KG)                                                                               
  (\$1=RMB7.15)                                                                                

                                                                                               \% Change

  HS Code                              2001   2002   2003   2004   2005   2006   2007   2008   2005/04

  2007.1200       Frozen whole broiler 1.6    1.6    1.3    1.3    1.3    1.3    1.3    1.3    0.00

  0207.1411       Frozen broiler cuts  1.2    1.0    0.8    0.6    0.6    0.6    0.6    0.6    0.00
                  with bones                                                                   

  0207.1419       Frozen broiler cuts, 2.7    1.5    1.2    1.0    1.0    1.0    1.0    1.0    0.00
                  boneless                                                                     

  0207.1421       Frozen broiler wings 2.3    1.2    1.0    0.9    0.9    0.8    0.8    0.8    0.00

  0207.1422       Frozen chicken paws  1      0.8    0.6    0.5    0.5    0.5    0.5    0.5    0.00

  0207.1429       Frozen chicken                                   0.5    0.5    0.5    0.5    0.00
                  wingtips, livers                                                             

  \* 0207.2900    Frozen wingtips,     1      0.8    0.6    0.5                                
                  paws, liver                                                                  

  0504.0021       Broiler gizzard      1.7    1.7    1.4    1.4    1.4    1.3    1.3    1.3    0.00

  Source: China                                                                                
  Customs                                                                                      

  \* Note: Since                                                                               
  January 1,                                                                                   
  2005, China                                                                                  
  Customs created                                                                              
  a new HS Code                                                                                
  (0207.1422) for                                                                              
  chicken paws                                                                                 

  and a new HS                                                                                 
  Code                                                                                         
  (0207.1429) for                                                                              
  chicken                                                                                      
  wingtips and                                                                                 
  livers instead                                                                               
  of HS Code                                                                                   
  02072900 which                                                                               

  contained all                                                                                
  the three                                                                                    
  products in the                                                                              
  past.                                                                                        
  --------------- -------------------- ------ ------ ------ ------ ------ ------ ------ ------ ---------