Russia introduces new sanctions against US poultry producers

By Vladislav Vorotnikov

- Last updated on GMT

Russian trade sanctions escalate
Russian veterinary watchdog Rosselkhoznadzor has banned all transit supplies of US poultry products through the country’s territory into Kazakhstan, claiming that some of these products are being re-exported back to Russia, by-passing the food embargo.

In an official statement, Rosselkhoznadzor claimed the new restrictions against US poultry had to be introduced “because of the threat of supplying products with unknown origin, as well as products made of raw materials with unknown origin to the Russian market”​.

This was due to the absence of a traceability system for products subject to veterinary control in Kazakhstan’s meat market according to Rosselkhoznadzor.

Big problems anticipated

In 2017, Kazakhstan imported 140,000 tonnes (t) of frozen poultry from the US, the majority of the 172,000t imported into the country in total last year, the Union of Poultry Breeders of Kazakhstan estimated. Kazakhstan has a strong dependence on import supplies, as the overall poultry consumption in the country was around 300,000t in 2017.

The overall revenue to US suppliers from selling poultry products in Kazakhstan has ranged between $120m and $140m in the past few years, and now export supplies are in jeopardy.

According to Rosselkhoznadzor, US poultry companies were exporting poultry products to Kazakhstan through sea ports in the European Union, and then via inland transport through Russian territory.

This route meant there was no opportunity to bypass Russian territory, and this could lead to sharp increase in the average price for poultry on the domestic market, as imported broiler meat was relatively cheap and so it was purchased by a significant proportion of the country's consumers, according to Saken Kalmakov, a spokesperson for the Kazakhstan Ministry of Agriculture.

Kazakhstan disagrees

The Kazakhstan Government demanded that Russia remove restrictions on the transit of US poultry products. Russia's veterinary services had approved Kazakhstan's traceability system during negotiations in 2016, the Ministry said in a statement on its website, and there had been no changes in the traceability system since that time, it claimed.

Local news outlet Knews,​ citing its own estimates, reported that the retail price for chicken on Kazakhstan's domestic market had already jumped from KZT1,400 ($3.80) per kg to KZT1,900 ($5.15) per kg, in just a few days after the new sanctions were introduced, as the first batches were blocked on the way to Kazakhstan and “the local industry was unprepared for this scenario”​.

Albert Davleyev, president of Russian consulting agency Agrifood Strategy, told GlobalMeatNews​ it was “very unlikely that some re-exports of US poultry from Kazakhstan to Russia actually occurred”​.

Davleyev added that, given the long journey from the EU to Kazakhstan and the payment of all duties on the way, there was “no economic feasibility to re-export US poultry to Russia”.​ 

“US leg quarters, which have been one of the most popular meat products on the Kazakh market for more than 20 years, have helped to resolve the food security problem, providing an affordable protein source for many Kazakh consumers. Their shortage, caused by any disruption in trade, has repeatedly proven a trigger for all meat prices in Kazakhstan and this recent case is no exception,”​ Davleyev said. 

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