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Russian trade sanctions could hurt U.S. poultry

 

 

 

By STEVE BINDER

Illinois Correspondent

 

WASHINGTON, D.C. — While Russian President Vladimir Putin last week announced a new set of sanctions banning the import of most U.S. agricultural products, American leaders are weighing whether to appeal the move to the World Trade Organization (WTO).

Just how much of an impact the sanctions will have on U.S. business interests remains unclear; overall, economists agree the import sanctions will have little effect on the U.S. economy in large part because Russia isn’t considered a huge trading partner. "The steps that Russia announced are likely insignificant as an impact on the U.S. economy," said David Cohen, Treasury undersecretary for terrorism and financial intelligence. "What the Russians have done here is essentially impose sanctions on their own people."

Last year, according to the USDA and the U.S. Trade Office, Russia purchased a total of about $16.5 billion in goods from the United States. Of that total, about $1.3 billion were agriculture products, or about 8 percent of all imports.

On the U.S. side, that total represents approximately 1/10 of 1 percent of the country’s gross domestic product (GDP), according to the White House Council of Economic Advisers.

The European Union (EU), which is also included in Putin’s announced sanctions, depends on Russian customers to the tune of about 1 percent of its overall GDP. During 2013, Russia purchased approximately $120 billion worth of goods from the EU, including about $22 billion in agriculture products.

The sanctions include fresh meats and vegetables, too. Poultry producers in the United States could be hit the hardest, and individual companies already are looking for replacement markets. Mexico is the largest buyer of U.S. poultry, with Russia second.

Last year, Russia purchased about 8 percent of all poultry the United States exported.

Mississippi-based Sanderson Farms, Inc., the third-largest poultry producer in the nation, had been looking for new buyers well before Putin announced its sanctions, said Mike Cockrell, the company’s CFO.

"We’d be crazy not to be making calls to alternative markets right now," he said, adding Putin is "using foreign trade as a political football."

Russia has barred imported American dairy products for several years, so the new sanctions will have "almost no impact" on the dairy industry, said Alan Levitt, the U.S. Dairy Export Council’s vice president of communications.

Russia, which qualified to join the WTO two years ago, repeatedly has been accused by the United States of using food safety concerns and its veterinary service as ways to ban supplies from countries with which it has strained relations.

Explicitly banning a country’s products for political reasons would violate WTO rules, Cohen said.

In a statement, American Soybean Assoc. President Ray Gaesser called on Putin to rescind the sanctions because they will hurt his own people more than the United States. "By limiting his people’s access to American soybeans and other products, he does a great disservice to his Russian countrymen and -women," Gaesser said.

"Sanctions and bans like the one proposed by President Putin serve only to hurt the Russian people by limiting their access to the food and products they need and want."

8/13/2014