Report Highlights: Chicken meat production is forecast to show moderate growth in 2024, based on a steady demand for this protein source. In 2023, the chicken sector continued to face production challenges due to tight supplies of hatching eggs and day-old chicks, as HPAI disproportionately impacted breeder and hatching farms. With domestic production below planned levels, and favorable international prices, chicken imports are expected to stay strong throughout 2023. In 2024, import tariff rate quota (TRQ) volumes will approach 119,000 metric tons, with the United States expected to maintain more than 80 percent share of total Canadian chicken meat imports. In 2023, Chile was the first country to take advantage of CPTPP TRQ volumes, although shipments halted in spring following HPAI detection.
Executive Summary
FAS/Canada projects moderate production growth for 2024, with chicken meat production forecast to reach 1.445 million metric tons (MMT), 2.5 percent above the estimated 2023 level. Demand for chicken meat remains solid, both at retail, and in the post-pandemic fully recovered food service sector. The trend is supported by sustained consumer preference for this type of protein, and by competitive chicken meat prices relative to other meat protein prices, despite the overall higher meat and poultry prices caused by lingering inflationary pressure in the food sector.
FAS/Canada estimates 2023 chicken meat production at 1.410 MMT, up nearly 3 percent from2022. Despite robust demand, production growth in 2023 was once again tempered by limited availability of day-olds chicks and hatching eggs, given a tight supply in both Canada and the United States (the U.S. accounts for over 20 percent of Canadian requirements), a development inherited from 2022. Avian influenza occurrences in both countries impacted breeder and hatching farms more significantly than chicken growing operations, resulting in reduced availability of chicks, and a Canadian chicken meat production below planned levels1.
Following the July 1, 2020, entry into force of the United States-Mexico-Canada Agreement (USMCA), Canadian chicken meat imports are comprised of three tariff rate quotas (TRQs): the global TRQ, now based on the fixed market access volume negotiated at the World Trade Organization (WTO); the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) TRQ; and the USMCA TRQ. The combined market access volume for chicken meat under these three TRQs will reach nearly 119,000 MT in 2024.
In addition to TRQ imports, Canadian poultry processing and further-processing companies are expected to import in 2024 an estimated 65,000 MT of chicken meat under Canada’s two import for re-export programs. Nearly all of the finished products produced unde r these programs would be exported to the United States. Overall, the United States is expected to supply over 80 percent of all chicken meat imported by Canada, both within, and outside of TRQs.
FAS/Canada forecasts a moderate growth in chicken meat production for 2024, rising 2.5 percent to 1.445 million metric tons (MMT), as both retail and food service demand remains solid, supported by competitive prices for chicken among other sources of animal protein. In particular, the food service sector is now considered fully recovered from the pandemic dip and is expected to consistently
contribute to chicken demand.
FAS/Canada also estimates 2023 chicken meat production at 1.410 MMT, a nearly 3 percent increase from 2022, although below industry expectations. Domestic production was not able to reach the planned production levels, as the tight supply of day-old chicks and hatching eggs extended from 2022 into 2023. In part, this was the result of the combined impact of lower egg hatchability and higher chick
mortality in Canada and the United States, with the U.S. accounting for over 20 percent of Canadian requirements (for more information please see the policy section in this report). Additionally, avian influenza outbreaks throughout both countries disproportionately impacted breeder and hatching operations, versus chicken growing operations.
According to the Canadian Food Inspection Agency (CFIA) avian influenza website, a total estimate of nearly 7.7 million birds were impacted by the disease to date, since the first outbreaks in early 2022, covering all poultry species, on both commercial and non-commercial operations. Overall, the avian influenza outbreak had a minimal impact on domestic chicken growing operations, as farmers continued to follow stringent biosecurity protocols.
In Canada, the chicken meat market consists primarily of broiler meat, which represents between 97 and 98 percent of the market. The balance is comprised of other chicken meat, mostly spent fowl (also called stewing/mature hens). Under Canada’s supply management system, poultry farmers are not vertically integrated into the processing and further processing industries. A large number of independent chicken farmers, often relatively small family operations, supply live birds to processing companies.
Production is tightly controlled through a quota system. Representatives of chicken producers, poultry processors, poultry further-processors, and the food service sector make production decisions jointly, taking into account current and forecast data on various economic indicators, including: imports, stocks, retail and food service sales, wholesale and retail prices, competing protein prices, world production conditions, feed prices, exchange rates, and domestic macroeconomic indicators. Once a decision is made for a national production volume, the Chicken Farmers of Canada (CFC), established under the Farm Products Agencies Act in 1979, allocates the total national quota volume for every 8-week production cycle to each of the ten producing provinces, where provincial-level
organizations allocate the production quota to individual producers based on the producer’s share of the total production quota.
The prices at which chicken farmers sell their live birds to processors vary from province to province and are typically established based on a cost of production formula. The two major input costs are feed and day-old chicks. The goal of Canada’s supply management system, which is based on production controls and cost-based prices, is to insulate Canadian chicken farmers from fluctuating input costs and
to stabilize farm income.
Consumption
The COVID-19 pandemic negatively impacted Canada’s decades-long, steady increase in chicken meat consumption, as only in 2023 per capita consumption is expected to bounce back and exceed the prepandemic 2019 level.
Total chicken meat consumption in Canada has nearly tripled over the last 35 years, due in part to thecountry’s steady population growth. In 2023, according to Statistics Canada official estimates, Canada’s population reached the 40 million mark, a 44 percent increase since 1990, when the population totaled 27.7 million. Additionally, 2022 was the first time in Canadian history when population grew by over 1
million people in a single year, and the highest annual population growth rate (2.7 percent) on record since 1957 (3.3 percent). This significant population growth is primarily attributed to immigration, which in turn is mostly comprised of a diversity of ethnic groups that tend to share similar preferences when it comes to chicken meat consumption.
It is no surprise that the ever-increasing popularity of chicken as a versatile, affordable protein drives the upward consumption trend. Chicken meat, competitively priced and consistently available, is an attractive and resilient substitute to red meat proteins, typically higher-priced, and at times in short supply. Additionally, chicken meat benefits from an increase in consumer health awareness, and the
perception that chicken is leaner, and therefore healthier, than other meats. Finally, increased chicken consumption can also be attributed to the proliferation of chicken-based quick-service offerings, as well as Canada’s changing ethnic composition. Nowadays, nearly 1 in 4 Canadians were born in another country, and Canada’s immigrant population increasingly hails from countries with stronger dietary
preferences for chicken rather than beef or pork. Increasing diversity has also expanded the range of food service outlets offering chicken-based dishes. As in the United States, chicken’s popularity in food service and at retail is indisputable.
According to an Agriculture and Agri-Food Canada (AAFC) estimate, in 2018, retail chicken purchases accounted for approximately 59 percent of Canada’s total chicken food availability, while quickservice restaurants constituted 24 percent, full-service restaurants 12 percent, and hotels and institutions accounted for roughly 5 percent of sales. While this data has yet to be updated, AAFC
maintains a website providing various more current statistics related to the chicken sector.
Prices
Under the supply management system, chicken producers receive a fixed price for their live birds, which is based on production costs and determined for every 8-week production cycle. Ontario is the largest chicken producing province in Canada, accounting for about one-third of the market, and therefore Ontario live bird prices are the basis for the calculation of prices in other provinces. Due to the
supply management system, producer prices have remained relatively stable over time, typically tracking changes in feed prices, which represent the largest component in the cost of production.
The Canadian supply management system only guarantees prices for producers. Wholesale and retail chicken meat prices are usually reflective of market conditions in terms of supply and demand, as well as consumer preferences for various chicken cuts, quality, and degree of transformation. In 2023, retail food prices continued to be impacted by the inflationary pressure observed since 2022. While in June 2023, the overall consumer price index increased by 2.8 percent, year-over-year, the retail food price index posted the fifteenth consecutive month of rolling annual (year-over-year) increase of more than 9 percent (the index peaked at 11.4 percent in November 2022). Chicken retail prices also saw significant increases over the past 18 months, although remained more competitive than red meat prices, thus supporting sustained sales.
Traditionally, Canadian consumer preferences have skewed heavily towards white meat (chicken breasts and wings) over dark meat (chicken legs and thighs), but Canadian consumer preferences are gradually starting to balance out as demand for dark meat continues to rise, and prices for white meat cuts increase. While leg quarters had long been the least expensive chicken cut in grocery stores, greater
consumption of ‘ethnic cuisine’ and consumer price sensitivity have supported increased demand. The gradual decline and increased volatility in retail prices for leg quarters over the past several years and up until the 2022 inflationary boost reflects not so much a dip in consumer demand for dark meat, but rather a transition towards a more expensive dark meat cut: boneless thighs. The fresh boneless skinless breast, however, remains the most expensive chicken cut, which is widely used in restaurants and a preferred barbecue item for Canadians. Wings are particularly popular during the winter hockey season and other sporting events, and demand has grown considerably over the last few years.
FAS/Canada forecasts total chicken meat imports at 210,000 MT in 2024, up 10,000 MT from the estimated level of 200,000 MT for 2023. Discussed in the policy section, most chicken meat imports are controlled and subject to several tariff rate quotas (TRQs). Additional imports of products subject to TRQs are concentrated under two import-for-re-export programs, which require re-exporting of the imported chicken volumes. Canada also imports chicken products that are not import-controlled, such as spent fowl, and certain further-processed chicken products. Market conditions in the United States play a significant role in import decisions as there continues to be a large price differential between lower U.S. wholesale chicken meat prices and higher Canadian prices, and this price difference creates a strong incentive for importers to source U.S. chicken meat, especially under programs that provide a customs duty exemption (i.e., the import-for-re-export programs).
The overall decline in imports observed over the past eight years, from the 2015 peak, has been largely attributed to border enforcement measures by the federal authorities which uncovered imports of broiler meat (subject to TRQs) wrongfully labeled as spent fowl (not subject to import controls). Additionally, federal authorities conducted enforcement activities under the import-for-re-export programs, resulting in the delisting of noncompliant companies.
The United States is Canada’s largest supplier of chicken meat, typically commanding around 80-85 percent of the import market, followed by Brazil and Thailand. Some Canadian importers are discouraged from importing Brazilian chicken, despite its lower cost, because it cannot be re-exported to the United States. With the entry into force of the Comprehensive Economic and Trade Agreement (CETA) with the European Union (EU), Canada has imported an increasing volume of chicken meat from EU countries (e.g., frozen wings, and processed products from Hungary and Germany), adding competitive pressure on traditional suppliers (like the United States and Brazil).
Typically, Canada imports chicken wings and chicken breasts. Wings are primarily destined for the food service sector, while breast meat is utilized in various distribution channels, including further processing, food service, and retail. In 2023, Chile was the first country to benefit from Canada’s market access commitments under the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP) TRQ. However, the detection of highly pathogenetic avian influenza (HPAI) in the country put a halt to exports, although shipments are expected to resume once Chile is again free of the disease.
Product Control for Brazilian Poultry
Since USDA does not permit imports of Brazilian chicken meat, the Canadian Food Inspection Agency (CFIA) has strict import procedures to ensure Brazilian chicken meat imported into Canada does not enter the United States. Under CFIA regulations, chicken meat imported from Brazil may not be exported to the United States and may not be used in the manufacture of meat products exported to the United States. Canadian poultry slaughter and processing establishments that import chicken meat from Brazil are not eligible to export poultry meat products to the United States. In addition, chicken meat and meat products from non-eligible establishments must not enter Canadian establishments that have full export status for the United States. All Canadian establishments (including storage facilities) must segregate the meat on their premises by country of origin and destination.
Exports
FAS/Canada forecasts 2024 chicken meat exports at 120,000 MT, up 5,000 MT from the estimated 2023 export volume. In general, Canadian chicken exports fall into two broad categories. “Re-exports” under Canada’s imports-for-re-export programs constitute roughly half of all export shipments, with most products destined for the United States. The remaining export volume is generally comprised
of dark meat cuts for developing country markets. While market forces play a certain role in Canada’s export levels, the timeframe for the re-export requirement under Canada’s import-to-re-export programs also impacts the chicken meat export volumes in any given year. Additionally, as highlighted above, recent enforcement measures by federal authorities under import-to-re-export programs led to a decline in overall imports, which in turn translated into lower finished product volumes available for re-export.
Canada controls most chicken meat imports through TRQs. Until mid-2020, Canada applied the market access level negotiated under NAFTA to its global chicken TRQ (open to all trading partners), equal to 7.5 percent of the preceding year’s domestic broiler production as reported by Statistics Canada. After the USMCA entered into force on July 1, 2020, Canada’s market access under the global TRQ returned to the fixed volume negotiated under the WTO, supplemented by a new USMCA TRQ exclusively for U.S. chicken products. In addition, a CPTPP TRQ for chicken products originating in CPTPP member countries has been in place since late 2018.
Traditionally, the global/WTO chicken TRQ has been filled at nearly 100 percent, and FAS/Canada expects this fill rate to continue in the future. Although the USMCA chicken TRQ is new, FAS/Canada expects this TRQ to fill as well, given the long-standing business relationships established between Canadian importers and U.S. exporters under the global TRQ. To date, the CPTPP chicken TRQ stayed
largely unfilled, as Chile, the likely supplying country among the CPTPP members, only ratified the trade agreement in February 2023. Currently, Chile is not eligible to export poultry meat to Canada due to an HPAI outbreak.
Under these TRQs, imports are subject to low “within access commitment” duty rates, while imports over the TRQ limit are subject to prohibitive “over access commitment” rates. Imports from the United States under either the WTO TRQ or the USMCA TRQ benefit from duty free treatment, while overquota duties can reach 249 percent. For instance, within access imports of fresh boneless breasts from
the United States enter Canada duty free, while over access imports would be subject to a 249 percent tariff. Comparatively, imports of frozen boneless breasts from Brazil within the WTO TRQ are subject to a 5 percent tariff, and over access imports face the same 249 percent tariff.
The import volumes of chicken meat mentioned in this section are expressed in carcass weight equivalent, based on
Canada’s international trade commitments, according to which import permits are issued at a 1:1 ratio for bone-in chicken
cuts and a 2:1 ratio for boneless cuts. Therefore, the import quantities mentioned in this section are not directly comparable
with the import volumes mentioned in the rest of this report (which are expressed on a product-weight basis). Of all CPTPP member countries, Chile is viewed as the most likely, and possibly sole, supplier of chicken under the CPTPP TRQ.
In addition to chicken TRQs, Canada also maintains TRQs for broiler hatching eggs and chicks. Under USMCA, the global TRQ (opened to all countries) provides for a combined level of global import quotas on broiler hatching eggs and chick products at a level no lower than 21.1 percent of the estimated Canadian domestic production of broiler hatching eggs for a given calendar year. This combined annual
access level is further subdivided into two separate and distinct access levels:
– the annual access level for broiler hatching eggs is equivalent to 17.4 percent of Canadian domestic broiler hatching egg production, and
the annual access level for egg-equivalent chicks is 3.7 percent of Canadian domestic broiler hatching egg production.
Although global, the only country supplying Canada with hatching eggs and chicks is the United States. Canada also opened a CPTPP broiler hatching eggs and chicks TRQ, which is currently unfilled. Import for Re-Export Program Traditionally, the majority of supplementary imports have been comprised of imports under GAC’s Import for Re-Export Program (IREP). The program requires that the resulting processed chicken product be exported, since diversion of product imported under IREP to the domestic Canadian
market is prohibited.
IREP helps Canadian poultry processors and further processors remain viable by giving them access to lower priced imported chicken, but offers little to Canadian consumers who pay high retail prices for chicken under the supply managed regime. Canadian proponents of the IREP program argue that it allows Canadian chicken processing and further processing plants to achieve economies of scale they
could not otherwise achieve if restricted to available supplies of domestically produced chicken. IREP imports may be sourced from any country and re-exported to any country, but in practice almost the entire volume is imported from the United States and exported back to the U.S. market.
Duties Relief Program
2012 marked the emergence of increased utilization of the Duties Relief Program (DRP) managed by the Canada Border Services Agency (CBSA). While the DRP is similar to IREP, there are some differences that make DRP more appealing to importers. For instance, DRP requires the finished chicken meat products to be re-exported within four years, rather than the three-month limit under IREP. Imports of chicken under DRP peaked in 2015 and have since declined following a series of compliance verification activities by CBSA that revealed program non-compliance, resulting in several companies being delisted from the program. FAS/Canada estimates 2023 imports under IREP and DRP at 60,000 MT, down from the 2015 record level of 113,000 MT, due to closer scrutiny of program utilization and stricter compliance enforcement.
Supply Managed TRQ Consultation
In May 2019, Global Affairs Canada (GAC) opened public consultations on the Canadian allocation and administration of its dairy, poultry, and eggs tariff rate quotas (TRQs). Given the recent free trade agreements concluded by Canada (CETA, CPTPP and USMCA), the number of supply managed import TRQs nearly tripled, significantly increasing the administrative burden of TRQ management. The
consultation was meant to gather input from stakeholders as to how to best administer all the TRQs going forward. Following the initial round of consultations, GAC published a summary report. A second round of consultations was opened in February 2020, when GAC asked stakeholders to offer views on a set of policy options put forward for consideration. In May 2020, citing reasons related to the COVID19 pandemic, GAC decided to temporarily suspend the consultation process. In January 2021, consultations were resumed, with a closing deadline in March 2021, and a stated publication deadline for new policies of September 1, 2021. To date, GAC has not announced any new allocation policies.