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Russians feast on U.S. poultry

THE BALTIMORE SUN

MOSCOW -- Salvar Abasov hurls a 15-kilo bag of frozen chicken legs onto the grimy asphalt of the Kievskaya Street market, pronouncing proudly that his product is American.

Cheaper, fatter, tastier -- and amazingly, easier to find -- than Russian chicken, the fleshy little unpackaged thighs piling up on Mr. Abasov's sales table are indeed American.

To be precise, they're from Perdue's Showell Farms in Salisbury, Md.

How the American chicken leg -- from almost 5,000 miles away -- can edge local poultry off the dinner plate is a tale of how economics, and the Russian taste for dark meat, defies the logic of the map.

Sales of "Bush legs," the nickname for the American chicken quarters that began flooding onto the market as a form of foreign aid when George Bush was president, have increased from $83 million in 1993 to an anticipated $400 million this year.

Americans want white chicken meat; Russians love the dark. As a result, the sales of chicken parts that aren't as popular on the U.S. market help bring down the cost of chicken breasts in the United States.

"The success of leg quarters is because it's cheap meat that tastes good, not just because it is cheap," says Stefano Vlahovic, head of the recently opened Moscow sales office of Tyson Foods Inc.

"It's possible to buy Russian broilers cheaper," he says, "but if you don't want to violate your taste buds you won't."

Chicken quarters -- wings and thighs -- were selling last week at stalls like Mr. Abasov's for around 80 cents a pound. Poultry stalls at the Kievskaya Street market were thronged with buyers elbowing in to poke and prod the merchandise.

Dutch and French frozen chicken parts were available, too -- but they were at least a dime a pound more than the American chicken.

'There is no Russian chicken'

Asked where Russian chicken could be found, salespeople said: "There is no Russian chicken." They didn't just mean that there isn't any for sale. They meant that compared with the American superchicken there is no such thing as a Russian chicken.

The truth of the matter could be seen just down the street at the indoor Dorgomilovsky market. Two part-time, backyard Russian farmers sat, bored and gazing through the haze of their cigarette smoke. Their dozen freshly slaughtered bluish and bony broilers were selling for the equivalent of about $2.50 a pound. But they had no takers. They didn't even have any lookers.

"We don't deal in Russian chicken because we're trying to make the name of our firm synonymous with quality," says Konstantin Romanov, senior vice president of Soyuz Contract, a Russian conglomerate that controls 60 percent of the wholesale poultry market here.

"Chickens here aren't growing, they're dying," says Mr. Romanov, trying to illustrate the sickly look of Russian chickens as well as the state of the poultry industry itself.

The Russian chicken is basically a product of the collective farming system. And to hear Victor Gushchin, head of a Russian poultry research institute, explain it, American poultry production rocket science compared with the remnants of the Soviet poultry production system. The Russian poultry industry is producing only 60 percent of what it produced five years ago before the collapse of the Soviet Union, Mr. Gushchin says. Total production in Russia currently is 720,000 tons of chicken meat. Tyson alone, for example, sells more than one-fourth that amount in Russia.

Russian poultry is raised on farms near large cities. That means they are located where it is cold -- anathema to poultry breeding -- and far from the southern sources of feed grain, Mr. Gushchin says. America's poultry producers are located in warmer climates and near food supplies so that there are no huge transportation costs.

It takes about twice as much grain to produce a pound of meat in Russia than it does in the United States, he says. And Russian birds take 30 percent longer, or two weeks more, than American birds to reach maturity.

Further, he says, credit terms here are so high that outside of foreign investment, there's practically no way the former state collectives can modernize and enter the market economy.

So, a company like Tyson -- which takes a chicken from the Arkansas farm, to a processing plant, to a Gulf of Mexico port, then by refrigerated ship to the Russian port of St. Petersburg, and then by rail to various markets around Russia -- can actually out-compete any Russian poultry producer.

75 cents a pound wholesale

Tyson sells its chicken to wholesalers at about 75 cents a pound -- and that includes about 20 cents worth of protective tariffs that the Russian government has slapped on chicken imports. Even so, Mr. Gushchin says, it costs small backyard producers, as well as the large factories here, about 94 cents a pound to put a bird on the market.

Mr. Romanov says that Soyuz Contract expects to invest $180 million in its own poultry production plant in Russia, modeled after U.S. poultry producers such as Tyson, which pays small independent farmers to raise chicks near their processing plants and close to the source of feed.

"But, the problem is what to do with the white meat -- nobody [in Russia] wants it," he says. And so, Soyuz is giving itself three years to promote a Russian market for white breast meat before it makes the investment.

He says the color of chicken is very important here. Russians understand and are used to white chickens and the "blue" Russian chicken, he says. But the yellow chickens -- like those produced by Perdue Farms Inc. -- are hard to market here.

But with its January purchase of Showell Farms Inc. -- which was already selling its white chickens in Russia -- Maryland's largest chicken company has a large, growing share of the Russian market.

Premium for large white chicken legs

Salisbury-based Perdue expects to sell more than 60 million pounds of chicken in Russia this year, up from nothing in 1988. "The increase is very rapid," said company spokesman Dan Prince.

While Perdue's trademark yellow chickens do sell at a discount in Russia -- U.S. consumers pay more for a yellow skin -- the company is getting a premium for its large white chicken legs. Legs make up nine-10ths of its exports, Mr. Prince said.

And Perdue is finding that its chicken hot dogs are increasingly popular with sausage-hungry Russians, he said.

Mr. Gushchin, the poultry researcher, bemoaned the situation, saying, "A country that doesn't produce its own food can't survive."

He suggested that the Russian government is allowing an important industry to fail for the sake of allowing Russian middlemen to make a profit brokering poultry deals here. If protective tariffs were working, he asked, why did Tyson open a new office here this month?

At the Kievskaya Street market it's hard to find anyone critical of the foreign chicken invasion.

One salesperson, holding up a frozen chicken thigh, suggested that the enormous size of American chicken is somehow suspicious -- that it might be unhealthy.

But Klara Alexandrovna, a pensioner, picked up an American chicken leg and said, "Thanks, Americans, you're doing us a favor it's delicious."

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