Russia Can Substitute for Banned U.S. Chickens, Cherkizovo Says

Russia, the largest buyer of U.S. 

chickens, can make up for a ban on imports of American fowl with substitute protein sources and increased domestic flocks, the biggest Russian poultry producer said. 

      “A halt in U.S. chicken imports won’t be a catastrophe,” 

Sergei Mikhailov, chief executive officer of Moscow-based OAO Cherkizovo Group, said in an interview on Feb. 4. “It would have had a big impact when the U.S. sold a million tons of chicken to Russia, but not at current levels.” 

      Russia effectively banned imports of U.S. chickens as of Jan. 1, when the amount of chlorine permitted in inbound poultry shipments was reduced. U.S. farmers had permission to supply 600,000 metric tons of imports in 2010. Russian poultry producers may raise output by between 250,000 tons and 300,000 tons this year if demand is robust, according to the CEO. 

      “If the situation with U.S. chicken imports is not resolved, some 200,000 tons of the U.S. quota may be covered by growth in domestic production,” he said. “Some may be substituted by sausages, fish and other protein sources.” 

      Imports from countries such as Thailand and Brazil can fill any gap remaining from the absence of U.S. shipments, Mikhailov said. U.S. chicken-leg quarters compete with the cheapest sources of protein, rather than domestic poultry, he said. 

                           No Agreement 

      Chlorine is the primary disinfectant for U.S. poultry. 

American imports had a 22 percent share of the Russian market in 2009. Officials from both countries failed to reach agreement on ending the ban during talks in Moscow, Russia’s Health Ministry said on Jan. 22. 

      The Russian meat market has “unique” potential to expand, according to Mikhailov. Import substitution may lead to a 20 percent increase, and stronger demand may spur an equal amount of growth, he said. 

      “Consumption should be changing toward poultry and pork, as Russians underconsume meat in general but overconsume beef,”the CEO said. He predicted an increase in poultry’s share of Russian meat consumption to half in the next three years from 40 percent now. 

      Russian pork and poultry consumption will rise by between 5 percent and 10 percent this year, while beef demand will drop, according to Cherkizovo. The company in October reported a doubling of first-half net income and said on Feb. 2 its pork and poultry units will expand this year. 

      Cherkizovo expects to raise pork production by more than 20 percent this year to about 70,000 tons, Mikhailov said. Poultry output will climb by between 5 percent and 10 percent as capacity increases at plants in Bryansk and Penza. Cherkizovo will seek to boost output of meat products closer to 2008’s level, Mikhailov said. 

      Russia may be self-sufficient in poultry in two to three years, though imports substituting for types of meat that aren’t produced domestically will continue to make up between 5 percent and 10 percent of the market, according to the CEO. The country may be self-sufficient in pork in three to four years, he said.