International Egg and Poultry Review - By the USDA's Agricultural Marketing Service - This is a weekly report looking at international developments concerning the poultry industry, this week looking at Mexico and Russia.

Mexico

During the week of March 21, 2005 Mexico announced an outbreak of low pathogenic avian influenza in Durango, a state in northern Mexico. The strain was identified as H5N2, not the highly pathogenic H5N1 in Asia. The outbreak prompted the slaughter of approximately 2 million chickens, a million more were placed under quarantine. The outbreak has affected at least 31 flocks of broiler breeders and egg type layers. According to SAGARPA, approximately 19 companies are participating in the operation to contain the flu. The outbreak was identified as part of Mexico’s permanent avian influenza monitoring program.

According to some, the outbreak seems to be under control with product being placed into the food chain for consumers. Mexico currently has 4 thousand businesses that produce 34 million chickens a month, approximately 9% of their monthly production, has been affected by the latest outbreak in some fashion. There are no reports as to the source of the bird flu, but people are noting that Mexico had recently resumed poultry imports from Texas, United States into Secretary of Agriculture (SAGARPA) authorized processing plants.

Texas had low pathogenic avian influenza last year. Import restrictions are currently in effect for the U.S. states of California, Connecticut, Delaware, Maryland, Missouri, New Jersey, North Carolina, Pennsylvania and Texas; and are ineligible from the Texas counties of Gonzales, Guadalupe, Galdwell, Bastrop, Fayette, La Vaca, De Witt, Karnes, Wilson, Comal and Hays. States with export restrictions are allowed to export poultry meat and poultry products to Mexico to plants authorized by SAGARPA for thermal treatment (cooking).

The United States Department of Agriculture (USDA) does not restrict poultry imports due to a low pathogen bird flu outbreak. In 2004, the United States imported 23,760 dozen shell eggs from Mexico. Mexico also signed a free trade agreement with Japan last September that is expected to increase egg products exports to Japan by 30% in 2005. Some are predicting Mexico to export 9,000 tons of powdered eggs in 2005 to Japan and even more in 2006. Poultry meat exports to Japan are expected to take time to develop before significant amounts are exported. Source: USDA/FAS AND VARIOUS news sources

Russia

Imported poultry prices were stable through February, 2005, while domestic prices rose for whole birds and leg quarters. However, it is anticipated that prices may rise this spring due to high international prices. In early 2005, continued poor implementation of the poultry quota and pork and beef TRQs for the second straight year exacerbated the effect of rising world prices on the Russian market.

A brief survey of the different types of retail food outlets was done in and around Moscow. Moscow is often used to show emerging Russian trends. Some trends of interest include only the open air farmer’s markets carried imported poultry other than branded whole birds in hypermarkets. Fresh and frozen domestic poultry producers are making aggressive steps to capture imported poultry’s last market segment in Moscow, the low price category of the farmer’s markets.

In the past, both fresh and frozen could be bought unpackaged or in frozen bulk sizes, now packaging is ubiquitous for frozen, even in the farmer’s markets.

High volume producers are struggling to supply the large retailers and are beginning to exit the farmer’s markets due lack of supply. In 2003 food retail sales were up 20%, HRI up 6% and food processing up 5%. As a result of the high demand due in part to an increased price gap with red meat, high domestic prices, continued investment in production and continued new introduction of processed poultry products, broiler production is forecast to grow 13%. In order to attract more customers, poultry producers are diversifying production and have recently introduced halal and kosher production methods. Many experts believe as the balance of the country follows Moscow’s lead, poultry and the sophistication of its business practices will shift consumption away from pork and beef.

Russia is currently negotiating its membership into the World Trade Organization (WTO). The WTO main partners in trade have agreed to preserve meat quotas and the possible continuation of making quotas. Russia plans to preserve meat import quotas until 2009. In a proposed agreement with the U.S. to allow Russia into the WTO, Russia would not increase meat import quotas by more than 2.5% a year.

The poultry import quota is based on safeguard investigation. Law provides only for an limited extension if the industry successfully claim injury from imports. The poultry industry is anticipated to push to convert the quota into a TRQ after it expires which will allow the government to continue support and protect domestic producers. The import quota for 2005 on poultry meat was unchanged in overall volume and allocation from 2004. Russia’s poultry imports fell 4% during 2004 when compared to year ago numbers and are anticipated to decrease 7% in 2005 due to tariff rate quota and licensing problems.

Russian government officials have also signed a document stating that if some supplying country is banned due to an unfavorable epizootic situation, an economic entity has the right for re-issuance of the license for import of the same kind of goods from another country, irrespective of the size of quota established for the country.
Sources: USDA/FAS and various news sources To view the full report, including tables please click here

Source: USDA's Agricultural Marketing Service - 12th April 2005