When the clock struck midnight in Moscow on Friday, the door closed on U.S. poultry exports to Russia.
The ban, part of a broader one-year blockage of U.S. food products launched Aug. 6 by President Vladimir Putin’s government in retaliation to U.S. and European sanctions, closed off a market for 267,000 tons of chicken worth $309 million in 2013.
The move is expected to send reverberations through the poultry industry nationally and in the farms of northern Georgia, the top poultry-producing state.
Still, the impact should be relatively muted, especially compared to previous protectionist onslaughts. Russia, while the No. 2 market overall, bought only 7 percent of U.S. chicken exports in 2013, down from a peak of 40 percent in the 1990s.
“They banned us first in 1996 and it just sent the market into a death spiral. It was really, really bad. Prices dropped by over half … overnight,” said Toby Moore, a spokesman for the USA Poultry and Egg Export Council, based in Stone Mountain, Ga.
This time it’s different. Companies have diversified their export markets, targeting smaller countries in an effort to spread out their risk. There has also been one major player really picking up the slack: Mexico last year became the first billion-dollar market for U.S. poultry, partly due to a flu outbreak that wiped out much of its breeding stock, hampering its own domestic production.
Secondly, a drought here in the U.S. has pushed up prices of beef and pork, raising demand for chicken as a cheaper source or protein. In other words, there is room for the domestic market to absorb much of the Russian demand. Companies are being cautious, but many are saying that they’ll be able to “find a home for that product,” Mr. Moore added.
“Any time you put that much product on the market it’s going to cause some issues, but I don’t think it’s going to be nearly what it would’ve been had this happened 10 or 15 years ago,” he said.
As with many agricultural products, chicken is often used as a tool in trade battles between nations. Some companies, like Perdue Farms, decided to cut exposure to Russia completely in the wake of its 2009 crusade against chlorine disinfecting washes used prominently in the U.S. chicken industry. Also seen as a protectionist move, that ban remains in effect, but producers clean chickens bound for Russia with one of three separate washes approved by the authorities there.
The National Chicken Council, in a joint statement with the export council, seemed more concerned about how the new ban will affect Russian consumers.
“The biggest impact, we believe, will be on Russian citizens who will be burdened by higher prices for all food products, especially meat and poultry. The price of poultry in Russia is already rising and has recently been increasing at a rate of 2 percent to 3 percent per week,” it said.
Poultry production has a $38 billion overall direct and indirect impact on the state economy of Georgia, according to the Georgia Poultry Federation.
Visit www.usapeec.org to learn more.