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Apr. 28, 2006
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Russia Blocks Way for Imported Poultry
// Russian Agricultural Ministry finds a means to suspend chicken meat imports
The Russian veterinary watchdog has suspended all poultry imports to Russia, canceling poultry import permits. The Agricultural Ministry has thus found a way to curb the supplies, bypassing international agreement. Both importers and Russian producers do not hide the fact that the decision, the result of their lobbying, will help control domestic prices.
Russia is canceling all licenses on poultry imports for 2006 from April 27. According to a statement of the Agricultural Ministrys press service, the canceling was due to violations of veterinary laws, including offloading products without import permits, discrepancies between documents and actual cargoes, fake products as well as importing products with counterfeited certificates of the Russian Agricultural Supervision Service. Poultry will be allowed to be exported under old permits up to May 8. However, the Agricultural Ministry says that this is only a technical measure which will hardly influence the work of importers and promises to issue new certificates within 10-14 days, using a simplified system.

A number of experts are not that optimistic. Albert Davleev, the head of the Russian representative office of the USA Poultry and Egg Export Council, says: This schedule causes some concern as no one has explained so far how the new mechanism of issuing licenses will be like and how efficient it will be. Musheg Mamikonian, the head of the Russian Meat Union, warns that the prices may go up 20 percent if the issuing of new documents drags on for more than a month. Some products can be in shortage, for example turkey chest, used in meat processing to produce ham.

Yet, both importers and Russian producers have long craved for a price hike on chicken that accounts for the lions share of all poultry imports. They demanded that the government reduce the poultry import quota by 30 percent back in early March. A rapidly declining demand on chicken, triggered by bird flu, brought old rivals together.

Wholesale chicken prices came to 36 rubles per 1 kg in March. This is the lowest limit of the production prime cost of Russian chicken when the profitability tends to equal zero, Anton Surikov, managing director at the Association of Russian Chicken Operators, underscored. At the same time, importers profit margins fall down to 1 or 2 percent.

Meat imports quotes are set by inter-governmental agreements. The Russian-American agreements On Trade of Certain Kinds of Poultry, Beef and Pork regulate the volume of supplies up to 2010. Therefore, the Agricultural Ministrys decision to suspend veterinary licenses was the only chance to quickly restrict poultry imports without violating international agreements.

Over 2 million metric tons of poultry is annually consumed in Russia. Poultry imports are fixed by an annual import quota of 1.09 million metric tons. The United States and the European Union are the main importers, accounting for 74 percent and 18 percent of all imports, respectively.

Market participants do not hide their joy at the ministrys decision. The decision of the Agricultural Supervision Service is a direct consequence of the recent appeal of poultry producers who asked to protect their businesses from bankruptcy, said Ivan Kapitonov, the head of Rubezhs trade department. Importers, however, fear that issuing new licenses will bring about new expenses. I doubt that new certificates will be issues soon. It means that arriving containers with meat will stay at ports and wait for new permits, while we will be paying for the time there, Alexander Grach, the director general of Orgkhimekologiya, noted. The idle time of an ordinary 20-ton container costs $200 a day, according to SeaNews.

Imports also became apprehended on learning that they would have to pay between $110 and $115 per ton of poultry meat on certificates, whereas the Agricultural Supervision Service had issued certificates for free before. Given that a ton of the American poultry costs $900 after customs clearing and paying the VAT, the price will sure to grow 10-15 percent more, and thats a lot, a poultry importer said. The Russian Agricultural Supervision Service was unavailable for comment yesterday. Sergey Lisovsky, a deputy at the Federation Council, informed: It would be a just decision on imports because Russian producers already pay $1,000 or $1,400 per ton of their products for veterinary examinations.

Svetlana Mentyukova; Maria Shevchenko, St. Petersburg

All the Article in Russian as of Apr. 28, 2006

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