Russian President Vladimir Putin's order Wednesday banning agricultural imports for one year from any country that has sanctioned Russia for its actions in Ukraine will affect some Arkansas companies.
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http://www.arkansas…">Russia cuts food imports in sanctions retaliation
The ban came two days after a Russian food inspection service called out Tyson Foods and Mississippi-based Sanderson Farms for safety violations related to bacteria in poultry shipments.
"It's not unusual for Putin to use poultry for politics," said Mike Cockrell, chief financial officer for Sanderson Farms. "Putin does not like buying protein from the West."
The company is looking for alternative markets, including selling more chicken in Mexico and Africa.
Overall, Arkansas exports about $3.3 million of processed food to Russia, according to data from the International Trade Administration. The state exported as much as $300 million in processed food to Russia in 2001, before Russia enacted a ban on U.S. exports.
Those numbers do not take into account commodity exports, which are maintained by the U.S. Agriculture Department and are not broken down by state. In 2013, the U.S. exported to Russia $310 million in poultry and related products, followed by $172 million in tree nuts and $157 million in soybeans, according to the USDA.
Tyson Foods exports to Russia, although the company's annual report does not list Russia as a primary market. Tyson spokesman Worth Sparkman referred questions to the National Chicken Council, calling the situation an industry issue.
Cockrell said Russia banned American chicken in 2001 when the U.S. put a tariff on Russian steel.
"Putin didn't like that one bit, and as he is prone do do when he has political reason, he found human health concerns with American chicken," Cockrell said.
Prices took a nosedive as a result, but since then U.S. chicken companies have diversified their sales. Cockrell doesn't see these sanctions having the same impact.
Although Russia is the second largest market for U.S. chicken, exports to Russia account for only 7 percent of the total volume of U.S. chicken exports, down from 40 percent in the mid-1990s, according to a joint statement by the National Chicken Council and the USA Poultry & Egg Export Council.
"As a result, we do not expect that a Russian ban on U.S. poultry imports will have a great impact on our industry," the statement said. "The biggest impact, we believe, will be on Russian citizens who will be burdened by higher prices for all food products, especially meat and poultry."
The list of which products would be banned or limited was not available at press time, but the trade organizations said poultry would be on the list.
Although Tyson could lose some sales, Minnesota-based Cargill, which has beef and turkey operations in Arkansas, does not export turkey, beef or pork to Russia, said spokesman Mike Martin.
And Riceland, which is headquartered in Stuttgart, does not export rice to Russia, said Kevin McGilton, vice president of sales in the rice division.
Brandy Carroll, assistant director of commodity activities and market information for the Arkansas Farm Bureau, said most Arkansas soybeans are exported, but those exports go to China.
Still, when there is less demand for Arkansas agriculture in the global market, farmers can see decreased revenue. While farmers in Arkansas could see depressed prices, consumers in Russia could see increased prices. It trickles down, she said.
"Anytime you're using food for political motives, that's something we're opposed to," Carroll said. "Food is a basic human need."
Business on 08/07/2014