Russia denies citizenry much-liked U.S. chicken

Juicier export birds become victims of protectionism

March 15, 2002|By Ted Shelsby | Ted Shelsby,SUN STAFF

In Russia they are called "Bush legs," and they are at the center of one of the hottest trade disputes between Russia and the United States since the end of the Cold War.

The origin of the feather ruffling, which has resulted in a Russian ban on the import of U.S. chicken, dates to 1991, when then-President George H.W. Bush sent tons of surplus chicken leg quarters to Russia to help feed a hungry country.

Legs are the less desirable part of the chicken in this part of the world, but they are popular in Europe, where people tend to favor dark meat.

"They were an immediate hit," recalled August Schu- macher Jr., former director of the U.S. Department of Agriculture's export office. "The Russians fell in love with American chicken. They liked the taste. They liked the quality. They liked the fact that they had more meat on their bones and they cost a lot less than the local chicken."

The humanitarian effort marked the beginning of what has become the largest U.S. export item to Russia and a boon to poultry processors such as Perdue Farms Inc., Allen Family Foods Inc. and Tyson Foods Inc.

"Chicken leg quarters account for 20 percent of all U.S. exports to Russia," said Robert Walker, who opened the USDA's first trade office in Russia in 1997 and headed the office until April.

"Russia is our largest market for chicken," he said. "In terms of agriculture exports, chicken accounts for 80 percent of our exports to Russia."

Schumacher said, "The Russian market expanded rapidly. It went from nothing to over a million tons a year. The growth has been tremendous, and another good thing about that is that it paralleled the growing demand in the U.S. for fast-food chicken."

Schumacher said restaurants such as McDonald's and Burger King primarily use the white meat. "It was great," he said. "Russia became a lucrative market for a part of the chicken that wasn't popular here."

Part of the appeal of U.S. chicken in Russia has to do with its price, according to Richard A. Lobb, a spokesman for the National Chicken Council. Price also has something to do with the current dispute.

Lobb said U.S. chicken sells for 58 cents to 65 cents a pound on the streets of Moscow. This compares with 80 cents a pound for local chicken.

Last year, U.S. companies shipped 1.1 million metric tons of chicken, valued at $630 million, to Russia.

By comparison, Lobb said, Russian chicken processors produced only about 600,000 tons.

Russian processors have been complaining for years that it is difficult for them to compete with U.S. companies that can grow chickens, process them, ship them overseas, pay a 30 percent tariff and still sell them for about 20 percent less than the Russians can.

Walker said that during his stay in Russia, he remembers numerous attempts by processors there to restrict imports. "From time to time they pushed senior administrative officials to set import quotas," he said.

"The catalyst for the ban [which became effective Sunday] was probably steel," said Walker, linking the trade dispute to President Bush's placing tariffs of up to 30 percent on imported steel, including shipments from Russia.

"But it is primarily a protectionist movement," he said. "They are trying to protect their market, to be more competitive."

Walker said he thinks a secondary motive might be to lure more U.S. investment into the Russian poultry industry.

"Part of their thinking is that if U.S. companies have a plant there, they won't have to worry about an import ban," Walker said.

This is not the first Russian ban on U.S. chicken. Schumacher said the Russians did the same thing in 1997 and used the same reasons they are using now.

"They said our chickens were not safe," Schumacher said. "What they really wanted was to give their own industry a shot in the arm. It was strictly protectionism."

At that time, he said, the negotiations lasted for months. "I was in charge of those talks. They were very difficult. They were not forthcoming about their concerns. Plant people flew the [Russian] inspectors to plants all over the country in their private jets."

A breakthrough came, he said, when the USDA agreed to donate a large shipment of soybeans to Russia, which were sold and the money used to help upgrade the industry there.

U.S. poultry industry officials say that it will take about two months for the current ban to have a serious economic impact on companies here.

If the ban is not lifted in that time, the impact on Maryland's Eastern Shore "will be tremendous," said Lewis R. Riley, former Maryland agriculture secretary and a chicken grower. "It could cost the average farmer between $10,000 and $20,000 in lost sales."

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