U.S. Poultry Suppliers Dismiss Ban as Bluster

MTBusinessmen negotiating at a booth sponsored by the USA Poultry & Egg Export Council at a food expo Wednesday.
Russia's recent ban on 19 U.S. poultry producers and threats to cut quotas on U.S. chicken imports have created a stir but done little to hurt business, industry officials said Wednesday as they negotiated contracts at a food exhibition.

"To really influence the market, Russia would have to ban 50 to 60 producers. America has more than 200 poultry plants, so banning 19 of them is more of a PR strategy," said Lola Nouroutdinova, export manager for Jestin, a European frozen food company.

Nouroutdinova, speaking at her company's booth at the Moscow World Food exhibition, emphasized that the ban was nothing new and that temporary de-listings of U.S. and European poultry producers from Russia's list of eligible poultry exporters happen each year on a routine basis.

The ban, announced by Prime Minister Vladimir Putin on Aug. 29, roused attention because it coincided with escalating political tensions between Washington and Moscow over Russia's military operations in Georgia.

But "the news is that Putin spoke about it," said Albert Davleyev, regional director for the U.S. Poultry and Egg Export Council. "It shows that he, as prime minister, is in control of the situation."

The ban and Russia's subsequent decision to review its trade commitments to join the World Trade Organization might decrease U.S. poultry imports to Russia by as much as 10 percent but will not significantly impact the U.S. poultry industry, Davleyev said.

The United States currently exports more than 800,000 tons of poultry to Russia per year, and the cut will likely decrease 2009 exports by 150,000 tons, he said. In 2007, chicken and meat exports to Russia were worth more than $1 billion.

Vladimir Filonov / MT
A vendor showing off Russian pork at the World Food Moscow exhibition.
The main worry in the industry is not export cuts but high global commodity prices, which affect the cost of production for poultry producers. "The industry is struggling," Davleyev said. "Seventy percent of the cost is feed, and the costs of soy beans and corn are high."

Production costs, however, are higher for Russian producers because chicken feed in Russia consists mostly of wheat, a more costly crop that provides the chicken with less fat and protein than corn and soy.

Nevertheless, Russian producers may stand to gain a more competitive advantage next year if the government goes ahead to reduce the cheaper U.S. imports.

"Russians have an economic interest in trying to protect their industry," said Andrew Somers, president of the American Chamber of Commerce in Russia. "How much they should give to it is another question. This is the classic debate between free export, free trade and making sure the local industry grows."

Russian poultry production has grown by almost 20 percent in the past two years, said John Brook, regional direction of the U.S. Meat Export Federation.

With this in mind, the United States now needs "time to set up new operations" in other markets to make up for the future loss in revenue, Davleyev said.

Industry players said they were not worried that the Russian government might take more drastic measures with U.S. poultry import quotas any time soon.

"The government is acutely aware that they need to ensure that the Russian public can pay the prices," Brook said. "They have to be careful. They don't want to aggravate inflation."

Food prices are soaring at a much faster rate in Russia than in European countries, the State Statistics Service said this week.