Sunset of the ‘Bush leg era’

During the administration of President George H.W. Bush, the market for U.S. chicken exports opened in the former Soviet Union and that country quickly became the largest customer of U.S. leg quarters. Leg quarters were so closely identified with the President Bush that they became known as Bush Legs in the former Soviet Union. To this day, Russia is the largest customer for U.S. leg quarters.

For the USA, exported leg quarters became an essential part of the current chicken production paradigm. The Bush Leg Paradigm consists of:

• Deboned breast meat for the domestic market bid high by consumer preference.
• Chicken genetics emphasize breast meat yield.
• Leg quarters are relatively unwanted on the domestic market.
• About 50 percent of all large leg quarters are exported.
• Approximately half of those exported leg quarters are sold to Russia.

Exports of chicken meat to Russia have had their ups and downs over the years. Nevertheless, a total of 12 million metric tons of chicken meat are likely to have been exported to Russia between 1992 and 2009, the end of the current agreement.

This 17-year period could be called the "Bush Leg Era." Leg quarter exports helped sustain the U.S. broiler chicken industry and have been an enormous net positive. On the Russian side, consumers had access to an inexpensive protein during a period of economic transition when the purchasing power of Russian consumers was much lower than it is now. Bush legs have clearly been a win-win proposition for both countries.

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Long-term viability

Now, at the end of the second Bush Presidency, that of George W. Bush, the long-term viability of the Bush Leg Paradigm is in doubt. A recent industry level agreement between the USA and Russian poultry industries signaled the possible decline of the Russian market as the recipient for exported leg quarters. Although it is difficult to predict the eventual government level agreement between the two countries, the handwriting is on the wall that after 2009, exports to Russia may decline from recent high levels.

There was always a long-term flaw in the Bush Leg Paradigm. From the beginning, many in the Russian government saw leg quarter imports as a necessary and temporary evil. As the local Russian chicken industry recovered in the last decade, it became clear that a robust local industry made continued imports from the USA at high levels difficult politically. The USA needs to face the possibility of a diminished market in Russia.

What market can replace Russia? Other countries could serve as a home for U.S. leg quarters and the current paradigm could continue. However, a more fundamental change may be coming. The future may bring more of a balance in the value of the front and back half of the chicken.

New chicken paradigm

The new chicken paradigm could turn the old paradigm on its head. The back half of the chicken reached record price levels this summer and may well become permanently more valuable than before while the front half remains relatively less valuable than it was in years past.

• Key parts of the new paradigm are:
• Leg quarters remain relatively more valuable.
• Value of deboned thigh meat increases domestically.
• Relatively lower-priced deboned breast meat.
• Genetics move toward total meat yield.
• Exports include breast meat and small whole chickens.
• Diplomacy remains key in maintaining overseas markets.
• Russia is less important than before as an export customer.

One of the most interesting recent developments in the U.S. industry is the sudden competitiveness of the USA in the world chicken market for products other than leg quarters. This lucky break for the U.S. industry is partially dependent on the weak dollar and a strong Brazilian currency. Nevertheless, the USA at least for the moment, is no longer limited to exporting leg quarters. Small whole chickens and breast meat are likely candidates for increased exports. The Russian population, for example, is rapidly becoming increasingly wealthy and will logically demand a variety of chicken products expanded from the leg quarters. The USA can maintain the dollar value of sales to Russia even if quotas should decline by substituting higher value breast meat for lower value leg quarters.