090106 Russia, US Amend Trade Agreement on Pork, Poultry

January 5, 2009

Milwaukee (AP) -- The U.S. government and Russia have amended their five-year bilateral poultry and pork trade agreement with protections that should limit disruptions to trade, the U.S. Trade Representative said.

Russia is the U.S.'s largest market for chicken exports. In August, Moscow barred at least 19 U.S. poultry producers from sending their exports to Russia. The move came as relations between the two countries soured after Russia's war earlier that month with neighboring Georgia. Russia denied the poultry decision was political.

The amended agreement provides more certainty on Russia's import quotas -- the maximum Russian authorities will allow into the country -- and its tariffs for poultry and other meat during 2009, the USTR said in a statement Monday. The new poultry quota for 2009 is 750,000 tons, down from 931,500, USTA spokesman Scott Elmore said in an e-mail Tuesday. The pork quota goes to 100,000 tons from 50,000 tons.

Jim Sumner, president of USA Poultry & Egg Export Council, an export arm for the industry, said the quota level is about 20 percent lower than what U.S. industry officials had expected it to be, but it takes into account Russia's rising chicken production, which he said has been growing 15 percent to 17 percent per year for several years.

The agreement is good news for the poultry industry, which exports about 18 percent of its product each year, he said. The industry has been hurt this year by volatile commodity prices, which have crimped producers' margins, and an oversupply of meat on the market.

Sumner said exports are important for moving supply and the agreement should help the sagging industry.

"The likelihood of trade disruptions should be greatly reduced," he said. "That's really huge, positive news for our industry."

In a joint statement, Sumner's group and another industry group, the National Chicken Council, said they expect trade to continue "at a favorable level" similar to 2008's level of 760,000 metric tons.

The new agreement between the U.S. and Russia removes -- until 2010 -- the use of chlorine as an antimicrobial treatment during production, which might have been a reason for Russia to reject U.S. poultry, Sumner said.

"We feel this quota level, which recognizes their increasing domestic volumes will make for much more predictable trade," he said.

The bans this summer did not have much impact on U.S. businesses, but exports were hurt later in the year as Russian companies had difficulty getting financing because of the world credit crisis, Sumner said.

Stephens Inc. analyst Farha Aslam said the agreement signed by both countries "marks a critically important step in the continuation of meat trade with Russia."

Meat stocks rose Tuesday on the news of both the agreement with Russia and Mexico's reversal of last week's ban on imports from 30 U.S. meat plants.

Shares of the nation's largest pork producer, Smithfield Foods Inc. rose $1.15, or 9.4 percent, to close at $13.42. Shares of the world's largest meat producer, Tyson Foods Inc., rose 70 cents, or nearly 9 percent, to close at $8.55.