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. Last Updated: 07/27/2016

Russia Moves Against U.S. Poultry Imports

A combination of health concerns and a recent ban on U.S. poultry by Ukraine that could see even more American chicken flood the market has prompted Russia to take measures to protect its struggling industry, Deputy Agriculture Minister Sergei Dankvert said Friday.

"We are concerned about the use of chlorine by U.S. producers," Dankvert was quoted by news agencies as saying. "They are using chlorine-based chemicals as disinfectants. Although it is allowed by the current standards that we adopted back in 1994, we plan to revise them because chlorine might be a health hazard," he said.

Dankvert said the ministry had requested information from the United States about its use of the chemical, which may prove cancerous, in its poultry processing.

The European Union has banned American poultry, and China, following Ukraine's Jan. 1 ban, blacklisted several U.S. exporters and implemented tougher sanitary inspection standards last month. "We could have followed the same path. But we adhere to a well-balanced trade policy and will take steps only after consultations with U.S. authorities," Dankvert said.

In 1996, Russia and the United States concluded an agreement on the safety of imported poultry, according to which imports are allowed only from authorized farms and under strict control by Russian veterinarians. According to a press release of the veterinarian department of the Agriculture Ministry, the decision by Ukraine was made due to the absence of a similar agreement.

But health safety is not the only issue -- and may not be even the main one.

Deputy Prime Minister and Agriculture Minister Alexei Gordeyev said Thursday that as a result of Ukraine's ban, U.S. companies would be searching for a market for their products in Russia, Interfax reported. U.S. poultry exports to Ukraine is equal to 10-12 percent of its shipments to Russia, he said, adding, "The sector is finding itself in more and more of a difficult situation."

While domestic production grew 13.3 percent last year, it was still only half of what it was in 1990. Some farms posted healthy profits last year, but 30 percent either lost money or barely broke even. There are 166 large and medium-sized poultry farms registered in Russia, of which only 29 are working at full capacity. One hundred and nineteen farms need modernization, another 25 farms are currently idle, according to the Agriculture Ministry.

Dankvert said the ministry wants to protect local poultry producers by implementing higher import duties and setting import quotas.

"We plan to impose restrictions applied within the World Trade Organization, including tariff quotas," Reuters quoted him as saying. Under a tariff quota, a fixed quantity of goods may be imported at a lower-than-normal tariff.

The ministry has already sent the government commission for protective measures in foreign trade a proposal to raise import duties on poultry to 30 percent from 25 percent.

The commission's working group met Friday and "we expect the decision to be taken quite fast," Dankvert said.

Others were skeptical that quick action would be taken, however.

"There won't be any radical decisions on quotas for poultry until next year," said Nikolai Demyanov, head of the analytical department of the Institute for Agricultural Market Studies. He warned of a market imbalance if Russia acts too brashly: "Quotas will support local producers, but there is a danger that real demand will not be satisfied."

Food imports are outstripping domestic production by a ration of roughly two-to-one and could hit farmers hard, prompting Russia to re-examine the quality of its imports, Dankvert said.

Last year, poultry imports nearly doubled to 1.36 million tons from 687,000 tons in 2000. Domestic poultry farms produced just 860,000 tons, or 49 percent of the country's consumption. Dankvert said that Russia is aiming to double its poultry output by 2005.

Albert Davleyev, head of the U.S. Poultry and Egg Export Council office in Russia, said that poultry imports had not actually risen. He said the numbers indicate that much of Russia's so-called gray market in poultry had been brought out into open.

"The introduction of quotas will lead to an increase of gray and black imports and, as a result, a drop in prices," said Davleyev, adding that American poultry prices have dropped 5 percent over the last few days as a result of Russia's position.