The economics of a duck, from Beijing to Brussels

Nearly two decades after graduating from Nanjing University, one of my fondest memories of the city is not the lecture halls or the library, but the dinner table.

It was there that I first realized how completely Chinese cuisine makes use of a duck. A whole duck can be the centerpiece of a banquet, while its legs, wings and head become separate dishes. The neck, feet, tongue and liver are turned into savory snacks, and even duck blood — an ingredient that surprises many foreigners — becomes the soul of a comforting bowl of duck blood vermicelli soup.

The same philosophy is found in Beijing. A Peking duck is first carved into thin slices and wrapped in pancakes with sweet bean sauce, while the remaining bones, still covered with bits of meat, are made into a rich soup with Chinese cabbage or, my favorite, crispy pepper-and-salt duck rack.

As the Chinese saying goes, not a single gram of a duck should go to waste.

Living in Europe has shown me a different approach. Duck is still a popular dish, but duck gizzards seldom appear on menus. Apart from the occasional gesiers de canard in southwestern France and a few other places, the rest of the bird is largely absent from the table.

There are several reasons for the difference. Higher labor costs make processing small organs less economical, and Europe never developed the same tradition of eating nearly every edible part of a duck. As a result, a much smaller share of the bird ends up on consumers' plates.

At first glance, this seems like nothing more than a cultural difference. But the longer I have lived in Europe, the more I have come to see it as a lesson in economics.

Economists have long puzzled over how a whole duck in China can sometimes sell for little more, or even less, than the cost of raising it.

The answer lies in the industrial chain.

Consumers are not buying the same product. Some buy duck breast, others duck legs, necks, feet or tongues. Feathers become down jackets and quilts, fat is rendered into cooking oil, and bones are turned into soup.

In a sense, Chinese consumers are collectively crowdfunding the value of a duck. By purchasing different parts, they allow producers to monetize nearly the entire animal while keeping prices affordable — a rare outcome that benefits both producers and consumers.

That is why the European Commission's announcement on Thursday that it would initiate an anti-dumping investigation into imports of Pekin duck — a breed of large white ducks of Chinese origin used for meat production — looks somewhat ironic.

The investigation notice says there is sufficient evidence to justify a probe into whether Chinese exporters dumped Pekin duck on the European market.

Yet, the publicly available documents do not show that Chinese export prices are below production costs. Instead, the investigation constructs a "normal value" using Brazil as a surrogate country.

China's duck industry is highly transparent. Production data, feed costs and industry reports are readily available. Apparently, however, the available data did not sufficiently support the complainants' argument.

That raises another question. While Brazil does raise Pekin ducks, its industry is tiny compared with China's. Brazil's annual output is measured in thousands of tons, while China's duck meat production approaches 6 million tons.

Brazil's consumption pattern also resembles Europe's far more than China's. Its best-known duck dish, Pato no tucupi, features duck meat simmered in fermented cassava broth. As in Europe, duck offal occupies only a small niche in the market.

Can the production costs of such a small industry, with a fundamentally different consumption structure, serve as a meaningful benchmark for China's highly integrated duck industry? It's Economics 101 that larger industries typically achieve lower unit costs through economies of scale.

The question stayed with me, so I called my friend Jian Junbo, a professor at Fudan University's Center for European Studies. He suggested I examine another piece of the puzzle: Europe's agricultural policy.

Browsing the European Commission's website, we found that under the Common Agricultural Policy for 2023-27, the European Union plans to spend about 95.5 billion euros ($110 billion) on market support and related agricultural measures. A substantial share of that funding directly or indirectly benefits animal production, including livestock farming and animal feed.

Agriculture has long been one of the EU's most heavily supported sectors. European farm products are highly respected worldwide, including in China, where many consumers willingly pay premium prices for European cheese, wine and olive oil.

"If European producers still struggle to compete with Chinese products despite such extensive support, perhaps the EU should reflect on its own competitiveness," Jian said.

Later that evening, I found myself staring at a plate of duck. Trade disputes often revolve around percentages, methodologies and legal definitions, generating thousands of pages of technical documents and countless meetings among lawyers, economists and officials.

For ordinary consumers, however, the issue is much simpler. They just want good food at affordable prices — and on that point, it is hard to argue they have done anything wrong.

The author is chief correspondent at China Daily EU Bureau based in Brussels.