Poultry news is not good news for our State.
Amid fraying trade relations between Moscow and Washington, Russia said it would slash U.S. import quotas for chicken and pork, both big export products to the region from the U.S.
After U.S. officials said Russia's war with Georgia had cast doubt on Russia's bid to enter the World Trade Organization, Prime Minister Vladimir Putin Monday called for pulling out of trade deals that Russia had signed when it was expecting quick admission into the trade body.
Then Russian Agriculture Minister Alexei Gordeyev said Wednesday that Moscow plans to reduce quotas for imports of chicken and pork by "not tens but hundreds of thousands of tons."
Russia has helped the American meat industry grow for the past decade. Russia was the biggest importer of U.S. chicken meat in 2007, spending $741.5 million on U.S. imports, according to the USA Poultry and Egg Export Council.
Today an article in Global Atlanta has the headline "Georgia Poultry Farmers Face Russian Cutbacks." The article notes:
Georgia’s poultry industry is bracing for a 20 percent cut in exports to its largest overseas customer, Russia.
Russia is expected to announce Dec. 1 that it is cutting the amount of chicken it buys from the U.S.
The Russian reductions will hit an industry that already was having a tough year, said John McKissick, an agricultural economist at the University of Georgia. Feed prices jumped in 2008, but market prices for white meat, mostly sold domestically, were soft, Mr. McKissick said.
However, prices for dark meat, the chief export product, were up, said Mr. McKissick. “That was the shining star for the industry - exports,” he said. “Any kind of reductions in exports will be harmful.”
Georgia led the U.S. in poultry exports from January to September 2008, shipping out 539,395 metric tons valued at $601.8 million, according to the Export Council. Georgia poultry exports to Russia during the same period were 33,888 tons, valued at $37.3 million.
Most Georgia poultry farmers work under contract for large companies such as Pilgrim’s Pride Corp., which acquired Goldkist Inc. in 2006.
When the big companies cut production, poultry farmers make less money because they have fewer birds to raise.
For an article on how things are not going so well (to put it mildly) at Pilgrim's Pride, see this Wall Street Journal article.
A 5-25-08 post entitled "Chicken Producers in Price Pinch; Costs up 65% in Just Two Years," notes in part:
Until last year, Gold Kist was an important Georgia business headquartered in Atlanta. It had operations in Florida, Alabama, North and South Carolina, and in Georgia, including a hatchery, feed mill, and large processing plant in Douglas.
Last year after prolonged resistance from Gold Kist, the board members of both companies voted unanimously to combine the two companies, in what was actually an acquisition of Gold Kist by Pilgrim's Pride. Prior to the acquisition, Gold Kist was the third largest chicken company in the country.
The facilities here in Douglas continue to operate much as before the acquisition.