Livestock farmers dependent on Chinese feed additive want EU duty repealed

The Estonian Chamber of Agriculture and Commerce (EPKK) has appealed against an EU anti-dumping duty on Chinese lysine, a feed additive consumed by 90 percent of the country's pigs and chickens, warning it could raise pork and poultry prices.
In poultry and pork production, amino acids play a key role in improving meat quality. As animals cannot synthesize around half of these on their own, they must consume them through feed.
Triin Tintse, development adviser at the EPKK, explained that in nature, animals and birds obtain one of the most vital amino acids, lysine, by eating worms and insects. At production farms, however, livestock feed must be supplemented with lysine.
"If it isn't in the feed, the animals simply become stunted, their immune systems weaken and they start getting sick," Tintse acknowledged.
She noted that one of Estonia's largest poultry producers uses 40 metric tons of lysine a year. In pig and poultry farming, an average of 4 kilograms (kg) of the supplement is added per metric ton of feed.
"Feed accounts for 80 percent of total livestock farming costs," Tintse said. "And lysine makes up about 6 percent of those feed costs."
In other words, lysine is a vital substance for livestock farmers. However, 90 percent of the lysine used in Estonia is produced in China.
"lysine production has a significant carbon footprint, which is why lysine production is nearly nonexistent in the EU," the EPKK adviser explained. "China and the United States are the main producers of the amino acid, with South Korea and Japan also contributing to a lesser extent."
58-85 percent duties
In fact, only one lysine producer remains in Europe — the French company Metex Noovistago — but compared with Chinese factories, their product costs nearly twice as much.
Last April, the company filed a complaint with the European Commission, claiming that the Chinese were engaging in price dumping to drive down market prices.
"In its investigation, the European Commission found that Chinese manufacturers were selling lysine at dumping prices in order to capture the European market, putting Europe's only lysine producer in a difficult position," said Karl Stern, an expert in the free movement of goods at the Ministry of Economic Affairs and Communications.
To protect local production, the Commission imposed duties of 58-85 percent on Chinese lysine imports.
Imposing protective tariffs is nothing unusual in Europe. The most prominent recent dispute concerned tariffs on Chinese-subsidized electric vehicles (EVs), and anti-dumping measures on Chinese electric bicycles were also extended only just last week.
Also included on a long list of such measures are fiber optic cables and metal beer kegs from China. While China is the most frequently mentioned country in Commission reports, Turkey and Morocco are among other countries to have been named as well.
Chinese feed additives 75 percent of market share
In order to prove the occurrence of price dumping, the Commission conducts a thorough analysis. In simple terms, it must demonstrate that production costs are actually higher than the price at which the product is being sold on the European market.
The Commission's website also describes in detail how Chinese companies are closely linked to the Communist Party and how the Chinese state supports its chemical industry in accessing Western markets.
"The Commission found that the likelihood of Chinese manufacturers taking over the market with dumping prices could become a reality," Stern said.
"By 2023, the European producer's market share had dropped to 2 percent, while Chinese manufacturers' share had risen to 75 percent," he added.
Nevertheless, the Commission's analysis also acknowledges that lysine is indeed cheaper to produce in China than in Europe. The issue isn't just laxer environmental regulations and lower labor costs — cornstarch, which is used for lysine fermentation in both China and the U.S., is significantly cheaper than the wheat starch more widely available in Europe.
Chamber: Another price hike is criminal
According to the EPKK, Estonian businesses have already tried to wean themselves off Chinese lysine in the past, however other countries, including the U.S., have been unable to supply sufficient quantities of the additive.
For this reason, the chamber has urged the Estonian government to oppose the Commission's tariff.
"Our position is that production in Europe needs to be restored first, and only then should tariffs be imposed," Tintse noted.
In a letter to Minister of Regional Affairs and Agriculture Piret Hartman (SDE), the chamber listed a slew of new regulations and price hikes posing a threat to livestock farming, arguing that yet another hike in input costs is unfair and criminal.
At the Ministry of Economic Affairs, Stern noted that the anti-dumping duties imposed in January are provisional, and will be reviewed within six months at the latest.
After the initial tariff was imposed, all EU member states had the opportunity to voice their opinions.
In a vote held Tuesday, Estonia abstained. The ministry expert explained that Estonia could not fully support the tariffs, as they directly impact production costs for farmers. There are also concerns about potential lysine supply disruptions and the risk that Europe's sole producer could become a monopoly.
"This measure is likely to affect pork and poultry prices," he added.
European Commission rules prevent Stern from disclosing how other member states voted. In any case, however, the outcome of the vote is non-binding for the Commission.
"I believe further discussions will now take place between the Commission and stakeholders," the expert noted, adding that these discussions are closed.
"And at some point before the final measures are adopted, the Commission will release a brief public statement," he continued. "At that point, they may decide to repeal the measure, or they may adjust tariff rates."
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Editor: Aleksander Krjukov, Aili Vahtla