Western companies offer poultry sums in quest for Russian oil

January 29, 1992|By Kim Clark

Western oil companies are betting that the race for Russian oil can be won with chicken legs.

Mobil Oil Corp. is trying to win oil export rights from Russia by offering to trade millions of American chicken legs for Russian oil, according to poultry industry officials.

The proposed crude-for-food deal is so massive it could drive up domestic prices of chicken legs by a nickel a pound, industry officials said yesterday.

Mobil declined to confirm the negotiations. But Robert Anthony, president of American Poultry USA, said his chicken exporting company is discussing a three-way deal with Mobil. If signed, Mobil would pay Mr. Anthony's company to ship 528 million pounds of U.S. chicken legs a year to Russia in return for Russian oil.

If the pact is approved, Mobil would join a host of Western corporations that have worked out barter deals with former Soviet republics. The Western corporations often prefer trading goods because they want to avoid handling rubles, the quickly deflating Soviet currency.

Pepsi-Cola, which has been selling soft drinks in Russia for decades, takes its profits in the form of vodka and ships.

In November, Jackson, Miss.-based American Poultry brokered a deal in which a private oil company shipped 22 million pounds of chicken legs to Russia in exchange for oil. And at least one other major oil company is pursuing a chicken-for-oil deal, Mr. Anthony said. He declined to identify the other oil companies.

The oil companies and the Russians are talking chicken legs because they are the cheapest kind of meat available, he said.

He said the U.S. chicken legs are popular in Russia, where they are called "Bush legs" because they were bought with loans the Bush administration helped guarantee.

The legs aren't very popular in the United States, however.

Americans prefer chicken breasts, so chicken growers are left with lots of legs they sell at a discount or export, he said.

American Poultry, the nation's largest poultry exporter to the former Soviet Union, has sold 506 million pounds of chicken legs to Eastern Europe in the last 26 months, Mr. Anthony said.

He said he can sell chicken legs for as little as 36.4 cents a pound.

Almost all of the 1.2 billion pounds of U.S. chicken exported annually is dark meat, said the National Broiler Council, a poultry trade group. The United States exports 5 percent of its annual production of 21.6 billion pounds of chicken.

The Mobil proposal would take 2 percent of U.S. production, potentially raising the retail price of leg quarters by 4 cents to 5 cents a pound. Whole bird prices could rise 1 cent to 3 cents a pound, said Bill Roenigk, council vice president.

He predicted that the deal will go through because there is a surplus of chicken legs in the United States and Russia needs food.

Though consumers might not like the price increase, chicken growers need it, he said, because a general surplus of chicken has driven prices below the break even point.

The negotiations have been stymied by disputes over how much oil Mobil would be allowed to export and by the Russians' political and economic disarray, he said.

"The rubs have been a couple of things on the Russian end," Mr. Roenigk said.

Chicken growers said they would be delighted by the Mobil deal.

Steve McCauley, a spokesman for Perdue Farms Inc. in Salisbury, said his company has found the domestic demand for chicken white meat is twice the demand for dark meat.

An average dressed chicken is 37 percent breast, 37 percent legs, 12 percent wings and 14 percent back, according to the U.S. Department of Agriculture.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.