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Poultry import disputes between Russia and the US continue

Despite 5 months of talks and a number of optimistic statements by Russian officials about an upcoming positive decision on the import of chicken quarters from the US, the Russian agricultural lobby seems to have the upper hand over their US counterparts, reports RIA Novosti.

The Russian Industry and Trade Ministry recently approved the import of 150,000 t of chicken meat from other countries, assigning them part of the US quota and promising to issue relevant supplier licenses. They are most likely to be granted to Turkey and Italy, but the search for new suppliers might take longer than expected.

The 150,000 t is only a quarter of the US share on the Russian poultry meat market. The talks' failure could be seen as a concession to Russian poultry breeders and an attempt to determine if they will be able to fully replace imports on the domestic market.

Reports state that problems with US chicken imports began on January 1, 2010, when Russia enforced new sanitary standards similar to those of the EU, under which the chlorine solution used in meat processing should contain the same amount of chlorine as tap water: 0.5 mg per liter. This is why Russian producers now use European processing technology for chicken meat, mixing cold air with acetic and lactic acids.

American chicken meat is washed with a 20-50 mg/L chlorine solution. Russian health officials declared chlorine bath to be unsafe and banned the procedure, demanding that US famers adopt new technology by January 1, 2010 or lose the Russian market.

Talks began almost immediately, and it seemed the sides would reach agreement by early spring 2010, especially since the US share of the Russian poultry market was 20%.

As of early 2010, Russian producers satisfied approx. 75% of the market demand, and the country imported the remaining 25%. Of that amount, some 80% was imported from the US, the world's largest poultry producer and exporter. The US quota is 600,000 t this year.

The Russian Agriculture Ministry said it would take at least 4 years before domestic produce could fully replace imported poultry meat. Some analysts have calculated that a ban on US poultry imports would raise prices 15%, which is a weighty argument in favor of the talks.

A number of statements were made on an imminent end to this chicken dispute. In March 2010, Russian Foreign Ministry officials said it had been agreed that US farmers would use EU poultry processing methods.

In late May, Gennady Onishchenko, Russia's chief sanitary physician and head of the consumer rights authority, said an agreement on several technical questions was reached during his talks with US Ambassador John Beyrle.

It may seem strange that talks on a purely technical matter should take so long, but an analysis of the market explains why. In the first quarter of 2010, poultry imports fell from 147,000 t to 49,000 t, but contrary to forecasts prices on the Russian market did not grow.

In late April the Agriculture Ministry published data showing that prices for some poultry produce fell, which is not surprising because poultry production in Russia rose nearly 17% in January-March.

Russian poultry breeders have been consistent opponents of imports. Representatives of many companies and associations said that cheap imports were hindering the domestic sector's development.

While Russian and US officials were discussing the resumption of poultry meat imports, Russian farmers increased production to prevent price hikes. Prime Minister Vladimir Putin warned in late April that the US poultry meat import quotas could be cut.

Russian poultry producers can celebrate their victory in this battle, but the war is not over, continues RIA Novosti. The fact that no official statement has been made on a poultry import ban or radical cuts in import quotas shows that the Russian authorities are not confident that domestic producers can meet market demand.

Source: RIA Novosti

Natalie Berkhout

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