
Russia mulls cuts in poultry, pork imports; would hit U.S. producers hard
Published Wednesday August 27th, 2008


MOSCOW - Russia is considering cutting poultry and pork import quotas by hundreds of thousands of tonnes.
The move, which would hit American producers hard, comes amid a period of heightened tensions between Moscow and Washington over the conflict in Georgia.
Russian Agriculture Minister Alexei Gordeyev told reporters Wednesday that he thinks it's "time to change the quota regime and reduce imports, which have unfortunately built up in recent years."
The ITAR-Tass news agency quotes Gordeyev as saying domestic producers could make up the shortfall.
Any substantial cuts would likely have a significant impact on U.S. poultry producers, since Russia is their biggest market.
Earlier this week, Prime Minister Vladimir Putin backed proposals to freeze some of the agreements - particularly in the field of agriculture - relating to its efforts to join the 153-member World Trade Organization. Officials claim Moscow agreed to certain conditions with member countries in return for their help in fast-tracking Russia's entry, something that hasn't materialized.
"Agreements signed more than three years ago as part of the negotiations on WTO accession are unfortunately no longer in Russia's interests," said Gordeyev. "To put it mildly, we've been deceived."
Last month, Russian and U.S. lobbyists agreed in principle to cutting poultry imports to Russia from 2009.
U.S. producers supply nearly 75 per cent of the total poultry import quota set by Russia, which stands at about 1.1 million tonnes.
An analyst said Russia's timing was no coincidence.
"It has been on the agenda for some time," said Chris Weafer, chief strategist at UralSib bank in Moscow. "But the fact that it has been mentioned now is almost certainly linked with the rhetoric that we've had from Georgia, and from Prime Minister Vladimir Putin. ... It has just been accelerated as a result of current events."
Jim Sumner, president of USA Poultry & Egg Export Council, said it was important to separate economics from politics.
"We recognize there needs to be a balance between imports and domestic production in Russia," he said, speaking from the U.S. by telephone.
Overall, poultry imports account for nearly 40 per cent of Russia's total consumption, and pork around 30 per cent.
The Russian government has pursued a policy to prop up its agriculture industry in recent years, making efforts to attract domestic and foreign investment into a sector which has suffered from massive lack of investment in the past decades.
Russian President Dmitry Medvedev told the Group of Eight industrial countries earlier this year that Russia had a key part to play in addressing the global food crisis.
In the long term, Russia would significantly increase its agricultural production and supplies to the domestic and foreign markets, he said.
But analysts say it will take Russian producers time to plug the gap left by foreign producers. It could take up to two years for domestic supply to match demand, pushing up prices in the process, said Natalia Zagvozdina, an analyst at Renaissance Capital investment bank.




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