The market for frozen U.S. leg quarters in Russia opened in 1990 during the presidency of George H.W. Bush. The Russians, with their notable dry wit, immediately gave the product the nickname of “Bush Legs.” For the next 30 years, the ups and downs of that product and destination were so critical to the U.S. industry that the entire era could rightfully be called the Bush Leg Era.
Now that era is coming to a close as the importance of leg quarter exports to Russia slowly fades away amid rising Russian chicken production and the emergence of other countries including most notably, China, as destinations for U.S. chicken exports.
What were the characteristics of the Bush Leg Era and what will the next era be like?
The ‘Bush Leg’ Era, 1990-2010
During the Bush Leg Era, U.S. consumers developed a marked preference for deboned breast meat, driving the price of that product to high levels. The poultry industry responded by rapidly increasing production from state-of-the-art plants dedicated to deboning. Breeders developed chickens that would ultimately increase the breast yield of deboning chickens from 15% to 22%. Unfortunately, due to the unavoidable rules of biology, this turbo-charged increase in deboned breast production was not only matched but doubled by an increase of leg quarters, a product for which U.S. consumers were not clamoring to obtain.
Chart 1: U.S. chicken exports to Russia, metric tons
Meanwhile, in Russia, the curtain fell on the Communist era, and the Russian poultry industry collapsed. Domestic chicken production fell by 66% as the economy reeled from sudden political changes. A convenient source of protein to fill the gap was the suddenly inexpensive and massively available U.S. leg quarters. It was a match made in economics heaven, but the cultural differences made for a rocky marriage. The start-and-stop nature of exports to Russia gave the U.S. industry fits for 30 years. Now, the couple is likely to declare an amicable gradual separation.
The marriage is ending because chicken production is surging in Russia. From just 400,000 tons in 1996, production is now nearly 2 million metric tons and rising rapidly. Thanks to low prices of feed wheat, Russia may become an exporter of chicken meat. It is likely to both import chicken meat to Northern Russia and export chicken meat from Southern Russia in the future.
The next era
Where does that leave the U.S.? The story can have a happy ending. There are other markets such as China and even Cuba that are opening as Russia fades. In addition, because of immigration and changing demographics, U.S. consumers have developed a taste for legs and deboned thigh meat. And, although the passion for deboned breast meat has cooled, there may be opportunities in the export market, something that would have been unthinkable just a few years ago.
Chart 2: Deboned breast prices, U.S. dollars
The price of deboned breast meat, which was once much higher than the world price, has now fallen significantly. As can be seen on the graph, deboned breast was nearly $3 per pound (inflation adjusted) in 1990. Since then the price has fallen by 50% and is close to, and at times equal to, the world price. A more balanced price between the front and back half of the chicken is a healthy development for the U.S. industry and will be characteristic of the new era.
