China said on Wednesday it will levy anti-subsidy duties of up to 31.4 percent on some US chicken products that have received US government subsidies.

This is the first time that China has imposed duties on imports of agricultural goods on the grounds of alleged subsidies.

The Ministry of Commerce said the duties were necessary to create a level playing field for Chinese companies.

"The US government has provided subsidies to poultry farmers for forage crops like maize and soybeans which are used as feed for broiler chickens, which is raised specifically for meat production. This has not only given the US companies an unfair advantage in the Chinese market, but also hurt the interests of domestic companies," the ministry said in a statement.

Chinese companies have seen prices decline over the past two years, as the imported US chicken products are priced much cheaper, said Zhang Hengtao, vice-president of Beijing-based Huadu Group, a major chicken products supplier.

The average price of poultry products during the first quarter of this year declined by 10 to 20 percent, compared with the same period last year, Zhang said.

"The American products are cheaper because of the various agriculture subsidy policies. Prices of their forage crops for chicken are about 20 percent cheaper than those in China," Zhang said.

According to the ministry, the US chicken exporters who had submitted information to the government investigation would face duties ranging from 3.8 to 11.2 percent, while the remaining companies would be subjected to higher tariffs.

Chinese companies buying broiler-chicken products from the US will need to pay a deposit to the Customs authorities in line with the duty from Friday, the ministry said.

"The move intends to create a fair competition environment for domestic poultry companies, whose profit margins had been hit," said Ma Chuang, deputy secretary-general of the China Animal Agriculture Association.

China's import of chicken products from the US increased by 6.8 percent to 620,000 tons in 2009, while the nation's total chicken product imports declined by 7.5 percent to 730,000 tons during the same period, according to the association.

Meanwhile, hundreds of batches of imported chicken products from the United States were found to be unqualified due to safety risks in the investigation, either violating the guarantee time or having higher bacterial pathogens, Ma said.

"We also hope the US companies will bring safer products to China," Ma said.

The new tariffs come on top of a February move to impose anti-dumping duties of 105.4 percent on imported US chicken products.

(China Daily April 29, 2010)