Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Wide Ban Imposed On Meat Imports

The Agriculture Ministry on Monday banned all imports of meat, fish, poultry and dairy products from Europe to protect Russian agriculture from the outbreak of foot-and-mouth disease now threatening to sweep across the continent.

The ban will have the side effect of shutting down U.S. poultry exports to Russia because they are shipped through European ports, said Michael Smith, agricultural attache at the U.S. Embassy in Moscow, in a telephone interview.

U.S. chicken and other fowl accounted for 92 percent of poultry imports last year for a total of $1.6 billion, according to the U.S. Poultry and Egg Export Council. U.S. poultry makes up about 45 percent of the Russian market.

Silvia Kofler, spokeswoman for the European Commission's delegation in Russia, said the EU understands Russia's concerns but feels the ban goes too far. She said the inclusion of fish and chicken, which are not susceptible to foot-and-mouth, and countries that do not have the disease was unnecessary.

The European Union was studying the ban, and its veterinary committee planned to discuss it Tuesday. The Americans were seeking a meeting with Russia's head veterinarian, Smith said.

It was unclear how long the ban will last. "After the ban is in place, we will monitor the development of the situation in Europe and if it stabilizes, we will allow imports," said First Deputy Agriculture Minister Sergei Dankvert in comments carried by Interfax.

Restrictions already were in place for EU areas where foot-and-mouth disease has been detected — Britain, the Netherlands, and six departments in France. Ireland became the fourth country to be hit by the outbreak last week, but the new ban includes all of Europe, including non-EU countries like Norway and Poland, and the three Baltic -countries. The ban also extends to a wider variety of goods. In addition to food, it covers live animals and all animal products.

The Associated Press quoted officials in Norway as saying they were puzzled as to why the ban includes fish, a major Norwegian export. Norway earns 1.05 billion kroner ($117 million) a year on fish exports to Russia.

Denmark, the world's largest pork exporter, also was distressed by Russia's ban. Russia is one of Denmark's three biggest markets outside of the EU.

It was not clear how Russia will cope without imported meat, which the Meat Union says accounts for one-third of consumption. The Meat Union, which represents the biggest players in the Russian meat industry, predicted prices will rise about 15 percent.

Russia appeared to be counting on Belarus and Ukraine for some help in keeping meat on the shelves. Dankvert said Russia would be able to buy meat from those two former Soviet republics, Brazil and some regions of China, Interfax reported. Foot-and-mouth also has been detected this year in Turkey, Kyrgyzstan and Mongolia.

According to figures supplied by the Meat Union, European countries last year exported to Russia 221,089 tons of beef, or 59.6 percent of all beef imports, for $260.7 million. EU nations supplied 87,995 tons of pork, or 65.4 percent of pork imports, for $94.3 million.

The Meat Union estimates that at least 15 percent of imports enter illegally, said union spokesman Viktor Yatskin.

Figures for Russian meat production in 2000 were not yet available, but in 1999, Russia produced 1.9 million tons of beef and 1.4 million tons of pork.

The Meat Union itself, however, questions the reliability of the figures, which are based on government data, and is urging changes in the way the State Statistics Committee collects data on the meat industry.

A collapsing agricultural sector has seen Russia's annual meat production fall steadily from 10.1 million tons in 1990 to 4.3 million tons in 1999. It appeared to stabilize last year at 4.4 million tons, according to Meat Union statistics. These figures include poultry and lamb, but they do not account for unregulated parts of the market, such as livestock that people raise for their own consumption or for barter.

A short-term solution to compensate for the loss of European meat imports would be to seek imports from other suppliers. Industry insiders, however, say that countries that are free of foot-and-mouth are likely to export to wealthier buyers and bypass Russia, considered a dumping ground for cheaper cuts.

The United States, in any case, will not be able to replace European meat imports because, like its poultry, U.S. meat also is shipped through Europe and is covered by the ban, Smith said. U.S. beef and pork exports to Russia make up only 1 percent and about 10 percent of their respective import markets, according to the U.S. Embassy.

The Meat Union's Yatskin said Russian farmers have no incentive to produce more meat and prices would have to rise significantly to stimulate production. He estimated farmers' costs are about 43 rubles out of the 45 rubles farmers are paid by meat processors for each kilogram of beef. Wholesale prices would have to rise by about 15 rubles to entice farmers, he said.

Meat processors now sell the meat to retailers for about 50 rubles and the consumer pays about 60 rubles per kilogram, Yatskin said.

The U.S. Poultry and Egg Export Council suggested Monday that a portion of budget revenues generated from imports of U.S. poultry should be used to develop the local poultry industry.

The Russian budget received more than $200 million directly from import tariffs and value-added tax in 2000 and 2.1 billion rubles ($73 million) indirectly from the U.S. poultry imports, the council said in a statement.

According to Albert Davleyev, head of the council's local office, Russia consumed about 1.5 million tons of poultry last year, of which 613,500 tons came from the United States. Davleyev said Russian poultry production is modernizing and he predicted it will be able match the 15 percent growth achieved by the U.S. industry in the last decade.

"Russian poultry will price importers out of this country," Davleyev said.

Large poultry enterprises are hiring Western consultants and building modern, efficient facilities and buying out their competitors, he said.

The U.S. council invested $12 million in the Elinar-Broiler plant joint venture, located in the Naro-Fominsk district of the Moscow region, where it also offered training courses for others in the poultry industry, he said.