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Is Russia reneging on poultry pact?

The brand new poultry trade agreement between the U.S. and Russia looked to be in some jeopardy earlier this month after U.S. officials alleged Russia was reneging on the deal.

However, the issues appear to have been resolved and U.S.-raised chicken is on its way to Russia, the top U.S. and Mississippi poultry importer — at least for now.

Jim Sumner, president of the USA Poultry and Egg Export Council, was a key player in negotiating the U.S.-Russia poultry deal earlier this summer. Sumner told the Mississippi Business Journal that he wasn’t aware of any problems with the two-month-old trade pact until learning that a group of U.S. senators had written a letter to the Russian government claiming the agreement was not being honored.

The letter, made public late last month, was signed by a bipartisan group of two-dozen U.S. senators, including Sen. Thad Cochran (R-Miss.). Cochran wrote that he trusted the agreement was made “in good faith” and that “the Russian markets will be open to poultry imports from states like Mississippi.

Other senators were not as diplomatic. Sen. Al Franken (D-Minn.) called it a “major disappointment,” and that the Russians “should start holding up their end of the bargain immediately.”

Sumner said he isn’t sure who orchestrated the protest, and called it a “strange situation.”

“The two governments have kissed and made up,” said Sumner last week while he was on his way to Moscow. “We are optimistic that things are going to be okay.”

Jon Jones, left, is a chicken farmer and owns his owns operation in Simpson County. He says doesn’t care who buys his chickens as long as someone does.

Jon Jones, left, is a chicken farmer and owns his owns operation in Simpson County. He says doesn’t care who buys his chickens as long as someone does.

Last June, the U.S. poultry industry celebrated when President Obama and Russian President Medvedev reached an agreement that would allow the import of previously banned American chicken into Russia. The agreement ended the embargo announced in January by the Russians, who claimed American poultry was unsafe due to the use of chlorine-based pathogen reduction treatments to cleanse the carcasses.

The stakes were high. Before the ban, the U.S. was shipping 600,000 metric tons of poultry to Russia. Nearly half of all exported Mississippi poultry, with a farm gate value of $165 million, ended up in Russia.

In return for clearing U.S.-raised chickens, Russia asked for favorable treatment in its bid for World Trade Organization (WTO) membership.

As part of the agreement, Russia reserved the right to pre-qualify U.S. processing plants and cold storage facilities to ensure they met the requirements of its Federal Service for Veterinary and Phytosanitary Surveillance (also known as the Rosselkhoznadzor, or VPSS).

Cochran

Cochran

However, there was early confusion that prompted the letter from the senators. On Aug. 9, the VPSS said it was “seriously concerned” to read reports of American chicken boxed, labeled and ready to be shipped to Russia before achieving VPSS approval. The VPSS said only American facilities listed on its web site (www.fsvps.ru) were approved, and that it was “premature and unreasonable to prepare large consignments of poultry products for a dispatch to the Russian market.”

On Aug. 27, the Senate Agriculture Committee members learned that six of the plants they understood to be approved were still listed as “banned” by the Russians. One of those plants was the Peco Foods Inc. facility in Canton.

Sumner

Sumner

This could have created a crisis as U.S. poultry was already on its way to Russia. The senators were unsure if the shipment would be diverted from port.

Fortunately, the issues have been resolved. Mark Leggett, president of the Mississippi Poultry Association, said he was not sure how far to sea the U.S. poultry was at press time, but that it would take roughly 30 days for the poultry to arrive.

Russia agreed to allow U.S. poultry from more than two-dozen processing plants in the U.S., six of those located in Mississippi. The six Mississippi plants are Sanderson Farm Inc.’s facilities in Laurel and Collins, Peco Food Inc.’s operations in Canton, Sebastopol and Bay Springs and Koch Foods of Mississippi’s plant in Morton.

In addition, the Russians approved cold storage facilities, including four in Mississippi. They are Gulf Coast Cold Storage of Pascagoula, Millard Refrigerated Services of Richland, Nordic Cold Storage of Hattiesburg and Jackson Cold Storage of Jackson.

The lifting of ban saved the state’s poultry industry from major interruptions. Danny Thornton, Mississippi State University Extension professor and long-time chicken farmer, told the MBJ that if the ban had remained any longer, it “would have been devastating.”

Leggett said the rise in fuel and feed costs challenged the state’s poultry industry in 2008, and 2009 was not much better. The Russian ban in January had the industry worried that 2010 was going to be even tougher.

However, this year has proved something of a bounce-back year for the industry. Leggett said many poultry companies are looking to recruit growers to meet new demand. He pointed to the recent announcement that Peco Foods was building a new, $25-million feed mill at Lake in Central Mississippi. The plant will initially have the capacity to produce 13,000 tons of feed weekly, and when fully completed will produce 17,000 tons per week.

Sumner said another 40 or so U.S. facilities were in the application stage for Russian approval, and that Russian officials would be coming to the U.S. to audit plants in the next week or two.

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