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. Last Updated: 07/27/2016

Russian Markets Hot for U.S. Franks

WASHINGTON -- U.S. hot dogs have become a hot item in Russia.

The Russian Federation has become the leading overseas customer for made-in-the-U.S.A. frankfurters. The country imported 24 million kilograms of U.S. sausage and bologna last year -- most of that franks -- up from 11.3 million a year earlier and 50,000 in 1991.

Changes in the farm bill will make it easier to ship even more wieners to a nation looking for inexpensive food. Food companies hope the growing market will keep the sausage mills working at full speed beyond the fall-winter peak season.

For Russians, the hot dogs are a natural. Sosiska, or sausage, is routine fare, eaten for breakfast, lunch and dinner. Although vendors sell hot dogs from kiosks, U.S. exporters strive mostly for the home market.

"It's a fairly inexpensive product that gives them very cheap calories, basically," said Richard Carlson, vice president for international business at Farmland Foods in Kansas City, Missouri, a hot dog exporter.

The market for hot dogs and other U.S. farm exports has grown since the breakup of the Soviet Union in 1991. Livestock production has fallen behind during the restructuring of the economy.

Major companies like ConAgra, Farmland and Smithfield International have found happy buyers for U.S. hot dogs under American brand names and Russian private labels.

The Agriculture Department likes the prospects for hot dogs so much that it gave them a boost. The department's Foreign Agricultural Service said June 10 it would make frankfurters eligible for government-backed export credits.

The credits let Russian importers borrow money from Russian banks to purchase U.S. agricultural goods. The Russian bank gets credit from an American bank, and the U.S. government guarantees repayment.

With Russian interest rates near 30 percent, favorable credit matters a lot, says Dmitry Besedovsky, managing director of the U.S. office of SoyuzKontrakt, a major food importer and distributor in Russia.

"We'll be able to pass savings on to consumers," he said in a telephone interview from New York. "This will enable us to compete with European suppliers of hot dogs to Russia."

Even though U.S. hot dog makers say they have the cost advantage even without the credits, the credits cover all kinds of risks and make it possible to plan for the long run.

"The real thing is the guaranteed payment, because the Russians of course, and a lot of people in eastern Europe want extended terms," said Raoul Baxter, president of Smithfield International in Norfolk, Virginia.

Congress and the Clinton administration view the export credits as a critical trade weapon, making $3.4 billion available this year for exports worldwide. The Russian share is $50 million.

The use of the credits has been limited until U.S. President Bill Clinton signed the farm bill in April. Hot dogs for Russia became the first high value product to get an allocation under the new rules.