March 25, 2009

Russia's poultry production is forecast to increase 8.8 percent in 2009 compared to a 15.5 percent rise in 2008, with growth directly related to investment credit subsidies and continued government imposition of import restricting policies, according to a US Department of Agriculture attache report posted Tuesday (March 24) on the Foreign Agricultural Services Web site.

Turkey production is expected to increase 12.5 percent in 2009 as investors continue to commit resources to increase production capacity. Russia's Chief Medical Officer signed a resolution that prohibits the use of chlorinated anti-microbial washes in poultry production as of January 1, 2010. If implemented, the new chlorine maximum residue level will be 100 times more stringent than the current Russian requirement for poultry production and will have a major impact on trade. Poultry imports into Russia totalled 1.218 million tonnes in 2008 valued at US$1.339 billion. The United States continues to be the largest poultry exporter to Russia with 63 percent of total market share in 2008.

The fact that the production forecast is still positive in the middle of a serious global financial crisis is directly related to investment credit subsidies as laid out by the National Priority Project in agriculture (NPP) as well as continued government imposition of import restricting policies. The global financial crisis and devaluation of the Russian ruble has halted construction of dozens of new poultry facilities and froze renovations of several existing poultry facilities. According to the Russian Statistics Agency (Rosstat), Russia harvested a record 112.5 million tonnes (MT) of grain (bunker weight) by the beginning of November 2008. Feed stocks will be sufficient in 2009 as feed grain stocks increased by 17 percent in late 2008 in comparison with 2007. A larger stock should help keep production costs lower which is expected to keep farmgate prices (and possibly retail praises) stable.

The Russian Union of Poultry Producers (RUPP), the Russian Poultry Union and other such organizations continue lobbying for more government support such as more subsidized credits, and trade restriction on imported poultry. The average price for domestic frozen chicken leg quarters (CLQ) increased 10 percent from June 2007 to June 2008 while prices for imported CLQ increased only 3 percent.

Investors will continue to commit resources to increase production capacity for turkey. Producers are marketing turkey a healthier, more affordable alternative to red meat. Growing domestic production and rising levels of domestic and foreign investment in this area are expected to compensate for lower imports associated with the stronger dollar.

Russia's Chief Medical Officer Gennadiy Onishchenko signed Resolution #33 in June 2008 that prohibits the use of chlorinated anti-microbial washes in poultry production scheduled to take effect January 1, 2009. In late December 2008, Onishchenko postponed implementation of the resolution until January 1, 2010. The new chlorine maximum residue level will be 100 times more stringent than the current level set in Russian regulations for poultry production. In effect, the resolution will prohibit the common industry practice of using chlorine in antimicrobial washes to kill surface food-borne pathogens such as Salmonella and E. coli and will have a major impact on US exports to Russia.