Russia Approves Draft Agreement on Trade Accord with the U.S.

Russia will gradually increase the volume of poultry meat and beef imports from the U.S. and decrease U.S. pork imports by 2009 under Russian Government Resolution #221 “Agreement Between the Government of the United States of America and the Government of the Russian Federation on Trade in Certain Types of Poultry, Beef and Pork.” The special measure established for certain types of poultry will include boneless meat (codes HS 0207.14.10 and HS 0207.27.10), but without establishing separate volumes.

The draft agreement provides for obligatory consultations with the U.S. if Russia imposes veterinary restrictions on meat. Requirements for re-export of product from Russia will not be applied and import licenses must be issued within 5 calendar days after receipt of the application.

The agreement provides for semi-annual consultations between U.S. and Russian officials to review market conditions and decide whether to increase the volume of any quotas. Both parties will consider Russia’s requests for reallocation of unused U.S. share to other countries and U.S. requests for carryover of U.S. share from year to year. The parties will review the question of special measure parameters that may be in effect beyond 2009. One issue is whether to switch to a tariff-only regime.

The poultry quota will increase to 1,090.4 metric tons in 2005. The U.S will maintain a 74.4% share, so the 2005 actual quota will increase 5.1%, from 771,900 MT to 811,300 MT. By 2009, the U.S. quota will total 931.0 MT, a 14.8% increase. A tariff for over quota imports will go into effect in 2006, starting at 62.5% and then falling to 50% in 2009.

U.S. Broiler and Turkey Export Outlook

Broiler exports in the first quarter are expected to total 1.25 billion pounds, a 22-percent increase from the previous year. The large yearover- year increase is attributable to bans by a number of countries on U.S. poultry products in the first quarter of 2004 due to avian influenza (AI) outbreaks.

Normally with only moderate increases in production and growth in exports and lower stock levels, prices of broiler products would be expected to strengthen. Prices for whole birds averaged 71.9 cents per pound in the first quarter, down from the previous year, but up over 5 percent from the fourth quarter of 2004. Prices for whole broilers are expected to gradually strengthen during 2005, but not until the fourth quarter will they exceed last year’s levels.

The first quarter 2005 estimate for turkey production was reduced by 15 million pounds to 1.31 billion pounds, about even with production in the first quarter of 2004. Over the first 2 months of 2005, the number of turkeys slaughtered was down by 4 percent. This decrease in numbers has been offset by a 4-percent increase in the average liveweight to almost 29 pounds per bird.

The turkey production estimate has also been reduced for the remainder of 2005, with the total for the year at 5.49 million pounds, down 90 million pounds from the previous estimate. The reduction in the number of turkeys being slaughtered is a reflection of the amount of turkey poults being placed for growout, which has been lower on a year-overyear basis for a number of months.

Turkey exports over the first half of 2005 are expected to show considerable growth compared with the previous year.
Sources: USDA, Economic Research Service

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Source: USDA's Agricultural Marketing Service - 19th April 2005