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Impact of Russian Poultry Embargo on U.S. Agriculture: A Global Perspective

Explore how the Russian poultry embargo of 2002 influenced the U.S. agriculture market, affecting poultry, beef, and pork industries. Learn about the implications on pricing, supply, and global trade relationships.

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Impact of Russian Poultry Embargo on U.S. Agriculture: A Global Perspective

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  1. The International Market AG BM 102

  2. Introduction • We have a Global Food Market • U.S. imports 20% of our food and exports 30% of our production

  3. Russian poultry embargo • February 2002 • Response to our steel tariffs • Affected beef and pork markets as well

  4. Background • 8% of poultry production goes to Russia • Imports are 60% of Russian poultry consumption • In 2001, 1 million Metric tons to Russia • $630 million • 57% of Leg Quarter (Bush legs) exports

  5. Cost of the Embargo • March - $100 mil. to poultry industry • April $200 mil. to poultry industry • Also affected beef and pork • Barrows and gilts 35.3 cents., down from 45.8 previous year • Steers 65.6 cents. down from 72.7 previous year

  6. In Poultry Market • Loss of Russian market is a decrease in demand, which lowers price in order to absorb the production. • In the short run supply is inelastic so the price drops proportionately more than the quantity

  7. In Domestic Meat Market • Different ways of looking at it – one is added chicken on domestic market • Increases supply • Total meat demand quite inelastic • Price of all meats fall sharply relative to quantity

  8. More Broadly • Many agricultural commodities have this situation • Foreign market an important outlet • A few big customers • Overseas trouble can hurt market • Asian currency crisis in 1997-99 • Now, Mad Cow and Avian Influenza

  9. Net Effect • U.S. agriculture depends on foreign markets • U.S. agriculture is affected by changes in foreign economic & political conditions • Market for U.S. agriculture cannot grow much without foreign markets • They won’t buy our stuff if we won’t buy theirs – free trade helps ag – but not all products

  10. Free Trade & Ag Policy • Free trade makes agricultural support difficult • Can’t prop our prices up above world prices – sugar, peanuts, dairy • Can’t get access to other markets & keep ours closed • Ag is only part of bigger trade picture – steel, computers, etc. – broad negotiation

  11. Concluding Comments • Trade is important to U.S. agriculture • Policy is complex • Trade creates winners and losers, although both countries win in aggregate – tomatoes in Florida

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