DOMODEDOVO, Moscow Region -- Thousands of tiny chicks scampered around under the green lights of their glassed-in pen.
Thanks to technological advances, a worker can single-handedly care for up to 85,000 chicks, said Igor Lukashov, the chief veterinarian of Domodedovo, Mosselprom's newest poultry farm.
"The green light relaxes them. Birds can get very stressed out," Lukashov said, gesturing toward 10 day-old chicks in one of 12 buildings that make up the farm in the town of Domodedovo, some 55 kilometers south of Moscow.
U.S. poultry producers are also feeling tense these days. Their biggest export market is Russia, but sales might drop if the United States refuses to sign off on Russia's bid to join the World Trade Organization.
Russia is lobbying fiercely to get into the WTO, and Economic Development and Trade Minister German Gref raised the stakes this month by warning U.S. trade negotiators that Russia would scrap agreements on all meat imports if U.S.-Russian accession talks didn't end with a deal in October.
A halt to U.S. imports could push up store prices, but it would be good news to booming poultry farms like Domodedovo. Domestic production is growing by 15 percent per year.
Moreover, chicken appears to be a peripheral issue. People familiar with the WTO negotiations say the real problem is linked to a Russian ban on U.S. beef.
U.S. negotiators are scrambling to meet Gref's October deadline. "We made substantial progress on the outstanding issues and are in constant contact with the Russian side," an official at the U.S. Trade Representative Office said Friday in a written response to questions. "Our goal is to complete our agreement by the October date."
A spokeswoman for the Economic Development and Trade Ministry said Russia's position had not changed since Gref issued his threat.
With prices just starting to recover after avian flu jitters last winter, any limits could deal a painful blow to U.S. exporters. Thirty-five percent of their exports go to Russia. "It's unfortunate that poultry got dragged into this dispute. As I understand, this is not the primary issue holding up the success of WTO negotiations," James Sumner, president of USA Poultry & Egg Export Council, said by telephone from Atlanta.
Sumner declined to comment on the issues holding up the talks. But the president of the American Chamber of Commerce in Russia, Andrew Somers, identified Russian veterinary standards for meat imports as a key problem. "The real issue is the sanitary standards," Somers said, citing sources in the U.S. Congress. "It's serious, but I think it is resolvable."
Vladimir Filonov / MTLukashov said Mosselprom did not use growth hormones in its three farms and shipped poultry to more than 10 regions.Russia banned U.S. beef exports in 2003 after a case of mad cow disease was discovered in the United States. Negotiations to reopen Russia's beef market, worth some $57 million, are still under way, the U.S. Meat Export Federation said. "U.S. cattle producers are urging Russia to reopen the market to all U.S. beef as soon as possible, based on internationally recognized world health guidelines," Tanya Augustson Camarra, a spokeswoman for the National Cattlemen's Beef Association, said by e-mail.'
The issue is too costly not to resolve, said Alexei Portansky, chief of the information office of Russia's accession to the WTO. While U.S. beef exporters stand to lose well below $100 million from stricter sanitary standards, U.S. poultry exporters are expected to earn about $600 million from the Russian poultry market in 2006, meaning the potential risks of jeopardizing poultry exports are too high, Portansky said. "The presence of [U.S.] chicken in our market is justified because our poor buy the cheaper leg quarters," he said. U.S. exports are predominantly low-priced leg quarters. Portansky predicted Russia would probably not rehash a 2005 poultry agreement with the United States.
Under the agreement, the United States provided 816,000 tons of the 2.7 million tons of poultry that Russians ate last year, and the amount was to grow by 40 tons per year, to 930,000 tons in 2009. Russia imported a total of 1.3 million tons of poultry last year. The European Union was the largest source of imports, after the United States.
While reneging on preferential poultry import quotas could worsen U.S.-Russian relations, lowering the amount of U.S. chicken on the market is unlikely to cause any shocks. U.S. leg quarters are about 25 percent cheaper than other poultry on the market, because white meat and wings are sold in the United States at a premium, said Dmitry Rylko, general director of the Moscow-based Institute for Agricultural Market Studies. Higher domestic prices for chicken breasts and wings cover the cost of U.S. poultry production, he said, allowing U.S. firms to export low-priced dark meat, which is less appealing to American taste buds.
Imports from Brazil and the European Union and higher domestic production could easily fill any gap left by U.S. poultry, but a shift would surely boost retail prices. "Higher prices would be most noticeable in the Far East, Siberia and other regions that consume a large share of U.S. leg quarters," Rylko said.
He said it was impossible to speculate about how much prices might go up.
Vladimir Filonov / MTDomodedovo looks more like a modern warehousing park, with the chickens kept in white-and-blue garage-like buildings."If all 800,000-some tons from the U.S. were banned overnight, prices would drastically jump," said the head of the National Meat Union's executive committee, Sergei Yushin. "But the possibility of this happening is virtually nonexistent, unless the U.S. is badly hit by avian flu." In any case, as incomes grow, Russians are shifting from frozen U.S. quarters toward higher-end whole chicken from the EU and Russian refrigerated poultry, he said.
Russia produces 55 percent of the poultry it consumes and imports the rest, but Agriculture Minister Alexei Gordeyev told President Vladimir Putin last week that domestic producers would be able to supply 80 percent of Russia's demand for poultry in three years.
Vadim Kamashev, deputy general director of the company that owns the Domodedovo farm, agreed with Gordeyev. "With strict government enforcement of import quotas and continued attention to the national project on agriculture, his target is reachable," Kamashev said.
His company, Mosselprom, is the Moscow region's largest poultry business, and it plans to produce some 30,000 tons of poultry meat this year.
At first glance, Mosselprom's Domodedovo operation looks more like a modern warehousing park than a farm. Its white-and-blue garage-like buildings, which do not emit any odors typically associated with poultry farms, house chicken pens.
"We decreased the chicken growth cycle to 32 days because of the precise temperature and humidity settings we use," said Lukashov, the veterinarian, wearing a protective head-to-toe disposable suit.
He said Mosselprom did not use growth hormones in any of its three chicken farms and shipped its poultry meat to wholesalers and supermarkets in more than 10 regions.
Vladimir Filonov / MTMosselprom's ex-chief, Senator Sergei Lisovsky, is a staunch opponent of Russia joining the World Trade Organization.Mosselprom's former general director, Federation Council Senator Sergei Lisovsky, is a staunch WTO opponent. Lisovsky, who left the business when he became a senator two years ago, said all meat imports should be prohibited to speed up domestic development. Any foreign retaliation would not hurt Russia, he said by telephone. "Is the West going to stop buying natural resources from us? Of course not," said Lisovsky, the deputy chairman of the Federation Council's Agrarian and Food Policy Committee.
"We can open up our market in five to six years, when it fully develops," Lisovsky said.
The clock is ticking down on a deal -- and not only because of Gref's deadline. Proponents of the WTO warn that if a U.S.-Russian agreement is not signed in Geneva in October, it will probably be postponed for months, if not years.
"If we don't complete the [next round of bilateral] talks, our accession to the WTO could be postponed several years," said Portansky of the information office of Russia's accession to the WTO. National elections in the United States in November and State Duma elections next year promise to detract attention from the WTO, said Portansky and Somers of the American Chamber of Commerce.
"Both countries want to close this thing this year," Somers said.The Moscow Times
