March 18, 2004

Russia Poultry Industry Hit By Bird Flu, Global Competition

Russia's poultry industry is in disarray, affected by the global bird flu crisis and some poor decisions.

At the end of 2003, Russian poultry traders aggressively brought in supplies to meet their domestic demand, increasing 2003 imports, which were set at 744,000 metric tons (MT.) The increase served as the basis for the 2004 allocations, 1,050,000 MT. The end result was the expansion of domestic stocks at the end of 2003.

Yet, products are not arriving in Russia at normal intervals, due to poultry quota implementation problems and a month-long delay of the distribution of import licences to Russian importers. Even though this problem has been righted, normal flows of poultry into Russia will not resume until the first half of March 2004, due to shipping times from North and South America.

The larger stocks benefited local consumers temporarily by suppressing growth in Russian domestic retail prices. However, the suppression did not last long as outbreaks of Avian Influenza in Asia has triggered a reduction of poultry supplies on the world market forcing an upsurge in prices. The result of the prices hikes has caused some major importers to postpone poultry purchases from the U.S. until prices go down.

Consequently, Russian consumers have gone from an abundant, affordable supply of poultry to one that is more expensive and less available. In reaction, consumers are switching to other proteins such as beef and pork as poultry prices move to more comparable prices.

In conclusion, Russia has not been directly affected by the avian flu outbreak, but has most definitely experienced indirect price affects as a result of the global competition from many importing countries.