Bush's Legs Strike Back
American chicken legs, widely known in Russia as Bush's legs, have retuned to Russia. Russia has lifted the ban for 68 or 87 US-based poultry exporters. The ban was introduced on January 1, 2010 in connection with high concentrations of chlorine in American poultry. Contrary to expectations, the ban on the import of US poultry did not lead to price growth on poultry in Russia.
In June 2010, the presidents of Russia and the United States announced their intentions to remove obstacles for the deliveries of American poultry to Russia. On August 13, in Geneva, Russian officials informed their American colleagues about the opening of the import for 68 US-based enterprises from August 16. The list can subsequently be extended to 100 companies.
The talks between the two countries began immediately after the introduction of the ban. Russian officials were also conducting negotiations with other poultry importers and used the internal potential for increasing the home production of poultry too. In 2008, the poultry production in Russia made up 2.2 million tons, which was 300,000 tons higher than in 2007. In 2009, the production increased to 2.5 million tons.
The American poultry dominated the market of poultry import in Russia - 80 percent - for years. This year the quota for American companies was set on the level of 600,000 tons.
In 2011, Russia plans to cut the overall poultry imports to 600,000 tons. The USA will deliver 446,400 tons, the EU - 111,000 tons, other countries - 42,600 tons.
American companies have already reacted to the gradual decrease of the export opportunities and decided to concentrate on China, whose share in the structure of poultry shipments from the USA exceeds that of Russia. However, US enterprises deliver final product to Russia, whereas China buys poultry for industrial processing.
Russian specialists said that the reduction of the volume of poultry imports and the growth of the domestic poultry industry made Russia 29 percent less dependent on the import of this product. The shortage of poultry on the Russian market after the introduction of the ban on the import of the US production - 300,000 tons - was partially replaced with Russian products, which became a successful demonstration of the opportunities of the home industry. However, now that the ban has been lifted, specialists believe that the domestic poultry industry will begin to decline.
"Large retailers have already cut their orders for the Russian poultry by 25-30 percent. The prime cost of the Russian poultry has grown together with the price on fodders. The Americans sell their poultry at prices lower than the prime cost of the product. Many Russians will lose their jobs against the background of such circumstances. One shall not allow the import of American poultry in Russia today," Sergey Lisovsky, a senior official with the committee for agriculture and food policy of the Federation Council told Vesti.ru.
The USA is ready to sell its poultry to Russia for $1.6-1.7 per kilo.
"It is now turn for the Russian authorities to take the floor. The Russian producer is more important than the foreign trade turnover. One has to reduce import quotas to boost the home production. We now purchase subsidized American poultry, which means that US poultry makers receive the profit from the US government and Russian customers. Russian producers pay for themselves," Lisovsky said.