February 15, 2019 / 2:58 AM / 3 months ago

UPDATE 2-China to exempt some Brazilian chicken imports from tariffs

* Exempts 14 firms from duties if they sell above floor price

* Brazil is top overseas poultry supplier to China

* Chinese poultry prices currently boosted by domestic shortage (Adds comment, detail, picture)

By Dominique Patton

BEIJING, Feb 15 (Reuters) - China will exempt 14 Brazilian firms including BRF and JBS Group from anti-dumping tariffs on imports of chicken products, provided sales are made above an undisclosed floor price.

The exemptions follow months of negotiations between Brazilian chicken producers and China, as Brazil sought to resolve an anti-dumping probe launched in August 2017.

Brazil is the world’s top exporter of chicken and the biggest overseas supplier to China.

A preliminary determination in June last year had placed duties of between 18.8 percent to 38.4 percent on all China’s imports of Brazilian broiler chickens.

Under a final decision issued by the commerce ministry on Friday, Beijing will maintain tariffs of between 17.8 percent and 32.4 percent from Feb. 17 for five years.

However, a list of companies will be excluded from the tariffs as part of a “price undertaking” agreed between the two sides, and reported by Reuters last month. The agreement set minimum prices for sales to China, but those were not published on Friday.

The move comes after Chinese poultry prices JCI-BRO-JINN hit record levels of 11.2 yuan ($1.65) per kg late last year on tighter domestic supply.

China has banned imports of breeding birds from many major suppliers because of bird flu outbreaks, hurting domestic production. The country is the second-largest producer and consumer of chicken in the world.

Demand for poultry meat also appears to have increased after outbreaks of African swine fever dented appetite for pork.

Despite the preliminary results of the dumping probe, Brazilian chicken exports to China were expected to increase by around 10 percent in 2018 from a year earlier.

But competition is increasing, with China last year opening up its market to imports from Russia and lifting a years-long ban on Thailand.

“If the market goes down and there’s stronger competition, some low priced products won’t get into the market,” said an industry source familiar with the agreed prices.

The source declined to be identified due to the sensitivity of the matter.

Brazil mainly exports chicken feet, legs and wings to China, products that are in high demand and short supply in the domestic market. ($1 = 6.7762 Chinese yuan renminbi) (Reporting by Dominique Patton; Editing by Richard Pullin and Joseph Radford)

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