BEIJING/SAO PAULO (Reuters) - China on Friday launched an anti-dumping investigation into imports of Brazilian broiler chickens after a complaint from the domestic industry that the South American country has been selling its chicken below market value.
Brazil accounted for more than 50 percent of broiler product supplies to China, the world's No. 2 poultry consumer, between 2013 and 2016, according to a preliminary review, the Commerce Ministry said in a statement.
Any move to penalize imports, which are worth more than $1 billion a year, would be a major blow to Brazil's meat industry following a food safety scandal that threatened to tarnish the country's powerhouse protein industry.
ABPA, a group representing Brazilian chicken producers and exporters, denied they sell products below market prices, association president Francisco Turra told Reuters on Friday.
"We are very competitive and it is hard for the Chinese producer to understand," Turra said, reflecting on the surge of imports since the Chinese market opened to Brazilian poultry in 2009. "Such complaints are normal and we can defend ourselves."
Brazil faced similar claims from South Africa and Ukraine and won the cases, he said. Brazilian government officials did not immediately respond to requests for comment.
Shares of Brazil's BRF SA, the world's largest chicken exporter, fell 1 percent on Friday as the benchmark Bovespa stock index gained 0.2 percent.
A BRF representative declined to comment.
Brazil replaced the United States as the top chicken supplier after China slapped anti-dumping duties on U.S. broiler chicken products in 2010.
China is the biggest national consumer of Brazilian meat.
China relies on imports for its supply of white feather broiler chickens, which are favored by fast-food chains like KFC (YUM.N) and McDonalds (MCD.N) for their more rapid development and plumper meat. Yellow-feathered birds, which are native to China, are generally sold at retail.
The investigation comes just months after Beijing slapped hefty penalties on sugar imports from top growers such as Brazil and Thailand after lobbying by domestic mills.
In 2016, Brazil accounted for 85 percent of China's frozen chicken imports - almost 600,000 tonnes valued at as much as $1.23 billion, according to customs data.
The push by China's domestic industry for an anti-dumping probe came as poultry farmers and processors recover from the nation's worst outbreak of bird flu in years and struggle with falling demand.
"This is good news for the domestic chicken market," said a chicken farmer in northern China who gave his surname as Tan.
"The chicken market has been not so good since the second half of last year. Brazil is selling a lot to China at a cheap price while China has ample supplies itself."
In 2017, demand and output are expected to hit their lowest since 2006, according to U.S. government estimates. Domestic supplies are being hurt by low availability of grandparent breeder stock needed to produce more meat.
Worries about the deadly virus hurt demand for chicken meat and sent some regional prices <0#JCI-BROILER> to more than decade old lows in February.
Live broiler chicken prices in Shandong province, one of the nation's major producing areas, have since more than doubled, and were around 7.7 yuan ($1.15) on Friday, as the crisis passed and concerns about infection eased.
Import prices from Brazil have remained low in comparison, making it hard for the local industry to compete, analysts said.
Still, any curb on foreign supplies would likely boost domestic prices further, potentially denting demand for chicken as a cheap alternative to pork, the nation's favorite meat.
Broiler chicken sells for 14 yuan ($2.10) per kg, according to government data, almost one-third less than pork and more than 70 percent cheaper than beef and lamb.
(Reporting by Josephine Mason in Beijing and Ana Mano in Sao Paulo; Additional reporting by Hallie Gu in Beijing; Editing by Richard Pullin and Jeffrey Benkoe)