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Analysis & Opinion
28.12.10 Tastes Like Chicken
By Tai Adelaja

The Russian government issued a decree on Monday to formally slash its frozen poultry import quotas by more than 40 percent, ending a long period of squabbling and back-room negotiations involving major meat exporting countries such as the United States. According to the new government directive, Russia will halve the quota on poultry imports to 350,000 tons – 46 percent down from an earlier estimate of 600,000 tons next year, RIA Novosti reported. Russia’s frozen poultry import quotas for the outgoing year stood at 780,000 metric tons.

Industry executives as well as government officials have touted the cuts in poultry imports, which many see as humiliating, as evidence of growing domestic production. First Deputy Prime Minister Viktor Zubkov said in comments to reporters last month that the new volume of imports would be enough to meet domestic demand. Musheg Mamikonyan, who heads Russia's Meat Union, said the quota for poultry imports in 2011 was being reduced in order to boost local production. Earlier, Mamikonyan had predicted that that poultry quota may be slashed to 400,000 tons, with about 70 percent of that coming from the United States.

Russia's top Sanitary Officer Gennady Onishchenko last month threatened to impose a complete ban on the sales of frozen chicken starting January 1, in a move that analysts said will hurt imports from the United States, which currently supplies only frozen chicken to Russia. Onishchenko, who heads the Federal Consumer Protection Service, said chicken meat loses a significant amount of its nutritional value when frozen, citing research conducted in Russia. The decision to ban the use of frozen chicken for the manufacture of all processed products dates back to March 2008, Onishchenko said.

Onishchenko’s latest threat was credible enough for many WTO members, including the United States, to strongly criticize the move. U.S. Department of Agriculture Spokeswoman Katie Gorscak said in a statement that the ban had "no scientific basis or food safety rationale." Russian chief negotiator in the talks to join the World Trade Organization, Maxim Medvedkov, said the organization's members had already called the ban ungrounded and indicated that it did not conform to the organization’s standards, Interfax reported. A group of local poultry producers also wrote to First Deputy Prime Minister Zubkov last month saying that the proposed ban on use of frozen poultry in all processed products is “impossible to implement in many cases,” and will drive domestic prices up, Kommersant reported, citing a letter signed by 12 major processing farms. Extending the ban effectively halts Russian poultry imports, the newspaper said.

To the relief of poultry exporters, Onishchenko said last week that Russia has changed its position on banning importation of frozen chicken meat, after giving the issue careful consideration, and that it would resume imports from the start of next year. "As for a total ban, we have postponed it for the foreign market, and we will continue increasing chilled meat turnover on the internal market," Onishchenko said, RIA Novosti reported. Earlier, Onishchenko said poultry freezing was an outdated and crude technology, which led to a loss of many of the useful qualities of meat.
He also praised inert gas technology, which, he said, allowed storage of poultry for up to 120 days. But the National Meat Association said at the time that a technology for chilling poultry with inert gas did not exist, while the intention to ban freezing raised the question of whether Russia intended to export meat, as it could not be exported chilled.

Russia opened its door wider to U.S. poultry exports after both countries concluded a bilateral WTO accession agreement in late 2006. By 2008, Russia ranked as the biggest market for U.S. poultry, and is also the fourth largest market for U.S. pork exports. The United States shipped 733,000 tons of poultry meat to Russia in 2009 and the U.S. quota for 2010 was set at 600,000 tons, which, though smaller, still makes it Russia’s largest supplier of poultry products. However, Russia, which spent more than $750 million on U.S. poultry last year, froze imports on January 1 after long-planned regulations that forbid the import of poultry treated with chlorine – a production method used by many U.S. producers – went into effect. Moscow made new demands in August, saying the United States should provide guarantees that the plants authorized to supply meat have been inspected properly. The ban has drastically impacted the volume of U.S. poultry imports in Russia, which may stand at just 250,000 metric tons this year, according to November estimates by the Economic Development Ministry.

Poultry politics has also featured prominently as United States and Russia make efforts to reset bilateral relations.
Presidents Dmitry Medvedev and Barack Obama struck a deal in June to allow U.S. producers to import poultry meat that has been processed with substances other than chlorine. Implementation has been held up, however, by a series of inspections of U.S. meat production plants held between October 4 and October 16 this year. On October 18, Russia's Federal Veterinary and Phytosanitary Inspection Service cleared the way for only 18 out of 33 inspected American companies to export chicken meat to Russia. All 18 companies will be recommended for inclusion into the list of companies authorized to import meat to Russia, the service said in an October 18 statement cited by RIA Novosti. Two of the U.S. poultry exporters – Tyson and JBS's Pilgrim’s Pride subsidiary – said they would resume poultry exports to Russia in early September, in what would be the first U.S. poultry consignments after an eight-month pause following Russia's request for chlorine-free treatment of meat supplied to Russia.

There is little doubt that Russia has been steadily reducing the import quota as it strives to protect the rising domestic output of chicken meat. Mamikonyan said that local production of poultry will grow 13 percent this year to reach 2.9 million tons, and will add ten percent more in 2011. Pork production will also grow, albeit at a slower pace, from between eight percent to nine percent in 2010 and at ten percent next year, he said.

However, reducing Russia’s reliance on meat imports from the United States may also be an issue of national pride and sometimes – political expedience, experts say. A day after Russia’s agriculture watchdog announced it was granting permission for more poultry imports from the United States, Prime Minister Vladimir Putin had to make emollient statements meant to appease some of the nationalist leaders in the country’s Parliament. American imports of chicken meat fell from a one-time high of 1.5 million tons to 300,000 tons this year, Putin told Vladimir Zhirinovsky, the leader of Russia's Liberal Democratic Party. Putin said Russia does not need to import poultry in 2011 as it has already amassed the required volumes and has increased domestic production. He noted that Russia's sanitary services often had misgivings about how poultry imports were being produced and transported, adding that Russia was moving to increase domestic production. "I want to remind you that Russia's domestic poultry production has increased by over 70 percent and pork by 39 percent in the past few years. This is a considerable growth for any economy and for any agricultural sector," Putin said, RIA Novosti reported.

National Meat Association Head Sergei Yushin attributed this year’s cutback in poultry imports to the lack of a stable supply timetable for American poultry, which he said has been putting undue pressure on the market. “Imports from the United States are supposed to be completed in the fourth quarter, but since the first consignment arrived only in October, most of the meat imports would flood the market in the fourth quarter and possibly spill over into 2011,” Yushin said. Another reason, he said, is that domestic meat production could grow by as much as 300,000 tons this year, just enough to cover shortfall in imports.

However, some Russian meat producers have argued that poultry import from the United States is unlikely to exceed 60,000 tons before the year runs out, and therefore would not threaten domestic producers. In addition, imported chicken meat tended to come in at a lower price, they said. Anatoly Butorin, the general director of Bely Frigat Group, said that reducing meet imports will lead to a price hike on chicken meat in Russia. "The fresh meat being produced domestically is meant for well-heeled consumers," Butorin said. "Imported chicken meat, however, is for the poor and the pensioners. Ours is, unfortunately, a country of pensioners."
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