POULTRY PROCESSORS Ban on U.S. chicken still hurts industry

Russia has reduced is chicken imports since the steel tariffs took effect.
STATE COLLEGE, Pa. (AP) -- Poultry producers survived last year's bout with avian flu. But could steel tariffs do them in?
A Russian ban on U.S. chicken imports devastated the market for dark meat, sending broiler prices down more than 20 percent in 2002, and cut off American poultry farmers' largest export market.
That has led to stockpiling of dark meat at home -- which means processors need fewer new broilers from farmers.
"It's trickling down to people like us, who are definitely seeing a slowdown in the number of birds that we're growing on an annual basis," said Dan Heller of Flintrock Farm in Lititz.
"I'd say we're seeing between a 10 [percent] and 15 percent slowdown, which is directly related to our revenue. It obviously hurts."
Chicken was the top U.S. export to Russia, bringing in $600 million to $700 million per year. In February 2002, Russia imported 193 million pounds of American broilers, according to Bryan Vasseur, director of the Institute of Ranch Management at Texas Christian University.
And while Americans prefer white meat -- which makes up only half of the chicken by volume -- Russians prefer dark meat, which helps to balance out the market.
"Trading with Russia was very beneficial to the industry," said Greg Martin, Penn State University poultry extension agent in Lancaster County.
Ban on U.S. chicken
But in March 2002, Russia began an on-again, off-again ban on U.S. chicken, complaining of unsanitary conditions in processing plants and demanding stricter inspections of American birds.
"They were requiring inspections of individual groups of birds, and they wanted to have veterinarians from Russia come over and inspect every single one of our plants," said R. Michael Hulet, associate professor of poultry science at Penn State.
Katarina Keller, an international trade expert and assistant professor of economics at Susquehanna University in Selinsgrove, said the health concerns were probably a smoke screen for a policy aimed at retaliating for U.S. steel tariffs -- which are expected to cost Russia $750 million in exports per year -- and protecting Russia's fledgling poultry industry.
"I think that the whole thing is originating from the fact that the American chicken is kind of taking over the Russian chicken market," said Keller, adding that about 70 percent of the chicken consumed in Russia comes from the United States.
"They are kind of picking on a big issue for us because steel is a big issue for them," Keller said. "That's not officially stated, but that's the only way I can read this."
Restrictions continued
Russia lifted the ban in April 2002, and exports resumed a month later. But additional restrictions kept Russian imports to about one-sixth their previous level, Vasseur said.
Bill Robinson, who raises broilers for Kreamer Feed in Snyder County, said the Russian embargo came at a particularly bad time.
Exports already were suffering because of outbreaks of avian flu in Pennsylvania, Virginia, West Virginia and North Carolina, and exotic Newcastle disease in California, Arizona and Nevada. On top of that, an East Coast drought resulted in higher feed prices.
Farmers -- whose prices are often fixed in contracts -- may have made out better than processors. Since December, Tyson Foods Inc., the world's largest meat producer, has closed plants in Oklahoma, Florida and Maryland.
Even though U.S. exports were back up to 153 million pounds in February 2003, Vasseur said, Tyson and other exporters have to work through a backlog of frozen meat before they can bring production back to pre-embargo levels.
"We still have that glut, or that stockpile of dark meat," Vasseur said. "We're working through it now, but we're still not up to the levels of spring of 2002."