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. Last Updated: 07/27/2016

Mixed Signals SparkFear on Food Quotas

Russia's top agriculture official said Tuesday that quotas on imports of poultry and other food items are on the drawing board, but the minister's claim was promptly denied by a senior foreign trade official. The mixed signals rekindled concerns among exporters and traders about possible new protectionist measures by Russia on the heels of recent threats to hike import tariffs and Moscow's lingering dispute with Washington over imports of U.S. chicken.


Speaking at a farm congress near Paris, Alexander Zaveryukha, Russian deputy prime minister and acting agriculture minister, said "above all it is poultry" that will be affected by import quotes, Reuters reported.


"It is unacceptable that last year the Americans increased their poultry production by 20 percent while Russian production fell, particularly when you consider the low price of American poultry," Reuters quoted him as saying.


Last year U.S. poultry exports to Russia, the largest export market for U.S. chicken, amounted to $500 million. Poultry imports cover as much as 80 percent of Russian demand.


The prospect of import limits on a range of foodstuffs, including meat and chicken, arose earlier this month when President Boris Yeltsin issued a decree ordering the preparation of a system of import quotas.


A spokesman for the World Trade Organization in Geneva, which Russia is seeking to join, said uncertainty about Moscow's declarations "could be a concern" to countries that trade with Russia.


"I am sure some countries exporting into Russia would like to know more about their plans," the spokesman said. The next meeting of the working party on Russia's WTO application is scheduled for the end of May, he added.


Following Zaveryukha's statement Tuesday, Nikolai Drozdov, deputy minister of foreign economic relations, came out with what amounted to a disclaimer. "The ministry is drafting no plans to impose quotas on food imports," Interfax quoted Drozdov as saying.


Nonetheless, Drozdov did not rule out possible future measures restricting imports.


"It is wrong that a country so rich in human and land resources like ours should purchase foodstuffs in such large amounts," he said. "What is needed is to step up competition inside the country rather than put up a fence around it."


Last week, the Russian government discussed the issue of food imports at a cabinet meeting and announced a series of measures to tighten up the control and certification of importers.


According to figures released after the meeting, imported goods last year amounted to 54 percent of Russian retail volume, up from 19 percent in 1993.


Another sector targeted under quota plans are butter imports, where importers and officials Tuesday voiced concern about the consequences of quotas.


A European agricultural source in Moscow expressed "some surprise" with the timing of the Russian move.


In the first nine months of last year, Russian butter imports doubled, according to figures from the Russian State Customs Committee, but since then Russian butter production has stabilized as have market prices for butter, said the source, who did not wish to be identified.


Reuters quoted an unidentified sales director of a major European butter exporter as saying there are "already thousands of obstacles to importing stuff into Russia. Is this going to be the final one? We'll have to wait and see."


In a separate development Tuesday, Russia announced the introduction of a 5 percent import duty on cocoa and green coffee beans effective May 15.