Poultry is a constantly changing global business, but the market adjustment now being pondered by the U.S. chicken industry is major. After two decades of perennially owning a chunk of the Russian proteins market equivalent to as much as 20% of their production, U.S. chicken producers are coming to grips with the inevitable – Russia will become self sufficient, more or less, in poultry production, and sooner now than later.

When and to what degree have been the only questions about Russia’s self-sufficiency, and coming off a year of major trade disruptions in their top markets, Russia and China, U.S. chicken exporters are focusing on new strategies for market maintenance and diversification around the world.

Key questions for U.S. poultry exporters  

As U.S. exporters ponder these adjustments, they must wrestle with key questions: What markets can replace the Russian business as access and quota there diminishes? Will new higher-value products be a necessary part of the export product mix in the future? And as the U.S. and other developed markets mature, how can their industry tap faster-growing markets in other parts of the world?

A bevy of trade and marketing experts joined the USA Poultry & Egg Export Council (USAPEEC) meeting in Washington, D.C., to work on these issues. And USAPEEC and its member companies, in fact, achieved surprising diversification in their customer markets in 2010, but a major review of strategy is under way.

Things considered at the meeting included the following:  

  • Can China, which remains a potentially huge market for U.S. poultry, be reopened? The office of the U.S. Trade Representative is said to be considering opening a WTO case against China because of its closure to U.S. poultry.
  • North Africa is potential new ground for U.S. poultry exports as domestic production there lags demand and economic development is on the upswing.

Realism for Russia   


Meantime, adjustments are ongoing in Russia, as well. The country is becoming more self-sufficient in poultry production, but the political rhetoric coming out of Moscow is overblown. Public statements by Russian leaders and others that the country won’t need imported poultry in 2011 don’t meet the test of reality.

In fact, in less public venues, Russian officials are telling their trading partners that Russia will continue to need imports, only at lower levels than before. Even so, more realism, and less government intervention, is needed for the Russian industry to develop as it should.

If the Russian poultry industry is to become a major exporter – a stated goal of Russian political leaders – it must become more efficient. Its recent growth, while significant, has mostly resulted from government investment, subsidies and protectionism. The investment is one thing, but the subsidies and protection don’t foster improvements in efficiencies. There’s no good substitute for market incentives and competition to generate efficiency.

U.S. export dilemma   

U.S. poultry exporters, themselves, face a dilemma: Russian demand, while still significant, is on the decline and market access is exasperatingly unpredictable. What’s more, as Russian consumer incomes rise, the demand for higher-value products is increasing and the demand for lower-value cuts like frozen leg quarters is decreasing. Key question: Would the production of higher value U.S. products for the Russian market be profitable? More than a few exporters have their doubts.

Whatever the answer to this and other questions with which U.S. poultry exporters are grappling, one thing is clear. Poultry is a global business and becoming more so all the time. The industry’s long-term growth will rise or fall on its international business.