On Aug 6, Russian Prime Minister Dmitry Medvedev announced a one-year ban on imports of numerous farm products from the U.S., Canada, the E.U., Norway and Australia. The ban was in overt response to Western financial sanctions imposed on Moscow for providing support to insurgents in Ukraine. According to Russian customs data, last year’s imports from the affected countries of the items involved – beef, pork, poultry, fish, fruit, vegetables, cheese, milk and other dairy products – amounted to $9 billion, $441 million of which came from the United States.
Nearly all of that was poultry; two years ago, Russia barred U.S. beef because the U.S. government wouldn’t issue certificates guaranteeing the meat would contain no trace of ractopamine, the muscle-partitioning agent sold by Elanco Animal Health as Paylean. Most beef and pork importing nations have established Maximum Residue Levels (MRLs) for ractopamine, but Russia, China and the E.U. have a zero-tolerance policy.
Despite a similar ban, U.S. pork sales to Russia had been recovering. In their Aug 11 Hog Outlook, University of Missouri economists Dr. Ron Plain and Dr. Scott Brown noted, “Pork exports to Russia accounted for 5.4 percent of total U.S. pork exports during May and June 2014, after being virtually zero from March 2013 through April 2014 due to concerns over ractopamine.” But U.S. pork sellers hardly missed the Russian business; Plain and Brown pointed out, “For each of the first six months of 2014, pork exports have exceeded the year ago level. Year to date export levels are 7.4 percent above 2013, an incredible feat given product price increases during the first half of the year.” Overall U.S. beef exports have also been running above year ago levels and set a record for the first half of the year at $3.27 billion, according to USDA data.
The $400 million in lost poultry sales represents 7 percent of all U.S. poultry exports, but the industry shrugged; exports, in turn, are just 20 percent of U.S. chicken production, so the lost sales would only back 1.4 percent of production into the domestic or other foreign markets. Ever since exports to the region surged during the last days of the Soviet Union, American poultry has been a favorite political target of the Kremlin; there was a temporary ban in 2002, and in 2010 Russia eventually slashed the U.S. quota from 700,000 metric tons to under 300,000 MT. Arkansas Farm Bureau Director of Market Information and Economics Matt King told Ozarks Farm & Neighbor, “We’ve seen this about three times in the past five years, where Russia’s either had anti-dumping or different things like that where they’ve banned U.S. products, primarily poultry products, from entering their markets. Producers here haven’t really felt a huge impact from that, as of yet.”
Upon announcing the bans, Russia immediately began solidifying its relationships with South American farm suppliers. But the U.S. will simply sell more meat in the markets from which South America is diverting supplies to Russia. Explains King, “Very likely you’re going to see Brazil going in there, selling at a higher price into that market just because they’re not accepting U.S. and they’ll have to buy Brazilian product. We’ll likely have some Asian markets where the U.S. may pick up some market share, and likely see very little impact to our poultry industry here.”
When it slowed poultry purchases from the U.S. in 2010, Russia said it was mounting a drive toward self sufficiency, but King said, “I don’t know how much further they can go in that direction. While they are trying to increase their production in-country, we’ve seen a lot of business from the United States because they’re buying genetics from us here. So while we’re not exporting the birds, (broiler breeding stock company) Cobb-Vantress and others have carved out a pretty significant market share in those types of markets.”
