SALTER: Mississippi poultry producers got early lessons in global trade conflicts with Russia

By: Sid Salter

Forget for a moment, if you can, the horrible human cost of the Russian invasion of Ukraine. Set aside the sad visages of the dead and maimed, the displaced and suffering, and the millions of refugees facing catastrophe.

Focus on how the war most immediately impacts you at this point – in your purse or wallet or family budget. 

Consumers are getting lessons in global trade and economic policy, food insecurity, and how much we all rely on farmers worldwide for sustenance – and all that knowledge is being earned on simple trips to the grocery store and the gas pumps.

According to the U.S. Poultry and Egg Association, Mississippi’s largest cash crop is poultry and egg production at a whopping $2.42 billion that fuels some 32,000 direct jobs and another 64,000 indirect/induced jobs among suppliers and other ancillary services. 

Generally, the chickens eat grain. Their farm-to-market journey from commercial poultry houses to the poultry processing plants includes transport on trucks powered by petroleum products.

Russia has a globally relevant supply of oil and gas – and a petrochemical infrastructure capable supply a substantial amount of the world’s fertilizer.

More than 25 percent of the world’s grain trade is produced in Russia and Ukraine – earning it the nickname “the world’s breadbasket.” With Russia’s invasion of Ukraine, a set of falling dominoes were set in motion that interjected uncertainty into global financial markets, the global food supply, the world’s energy markets, and virtually any activity used in producing food suddenly became more expensive.

Where does that reality leave us? What will be the impacts?

“The Ukraine war threatens staple crops from Europe’s key grain-growing regions, which means escalating food prices that have already been plaguing consumers around the world could get worse, raising the threat of a full-blown hunger crisis,” wrote Bloomberg trade analysts Elizabeth Elkin, Allison Nicole Smith and Sybilla Gross on March 13. “The United Nations warned that already record global food costs could surge another 22% as war stifles trade and slashes future harvests.”

Since the Carter administration, U.S economic sanctions against Russia and grain embargoes have been on the global economic scene. Mississippi poultry producers, who in Russia found a ready market for “dark” meat that American consumers rejected, were among the first to feel the sting of Russian Federation President Vladimir Putin’s policy lash after the 2014 crisis in Ukraine when Russia annexed Crimea and provoked war in the Donbas region.

In response to U.S. and European Union economic sanctions in 2014, Russia instituted a ban on importing agricultural products, raw materials and food – including Mississippi poultry meat. Three Russian scholars at Plekhanov Russian University of Economics and the Russian University of Transport Law Institute, both in Moscow, studied the impact of the ban on Russian markets in a 2018 scholarly journal article,

The results? In terms of volume, the import of poultry declined 14 %. In comparison, the value fell 6%: “Before the embargo, the leading supplier of poultry meat to the Russian Federation was the USA (51%), Belarus (16%) and Brazil (10%). After the embargo, the United States (30%) remained the leading supplier along with Brazil (21%). A significant market share of poultry meat supplies to the Russian Federation was captured by Belarus (26%).

That is the same Belarus that’s now Putin’s toady ally in the invasion of Ukraine.

According to U.S. Census data, in 2013, Russia imported about $1.3 billion in U.S. food and agricultural products or about 11 percent of all U.S. exports. The U.S. Department of Agriculture’s Foreign Agricultural Service reports that Russia has extended the import ban in the succeeding eight years.

A two-year pandemic followed by perfect storm interruption of global grain and energy supplies is a wicked recipe for runaway inflation, food insecurity and soaring energy prices – which is difficult unless one thinks about the tragic fate of the Ukrainian people.