By Amanda Brodhagen, Farms.com
The U.S. dollar is more likely to have a greater impact on the agricultural economy in the United States than Russia’s recent sanctions on U.S. food imports, says Warren Graeff, PNC Bank's Agricultural Banking Market Manager.
“The impact on U.S. agricultural exports is going to be more influenced by the U.S. dollar as we go forward in time, which will also be impacted by interest rates,” he said in an interview with Farms.com.
On August 6, Russian President Vladimir Putin signed a decree that placed restrictions on food imports from countries including – Canada, the United States, Australia, Norway, and the EU who imposed economic sanctions on Russia as a result of the ongoing conflict in Ukraine.
In 2012, two-way agriculture trade between the United States and Russia was valued at $1.5 billion, with American farm exports representing 97% of the total.
“Russia is really a pretty small player in the ag sector, only about 1% of total U.S. ag exports,” explained Graeff. “In the larger scheme of things I don’t think it [Russia’s ban on U.S. food imports] will have a significant impact” on U.S. agriculture.
Graeff says that while there have been some efforts made to expand U.S. market access with Russia, particularly in the pork sector, there has been limited success. Smithfield Foods, the largest pork producer and processor in the U.S., which was recently sold to a Chinese company in 2013 - Shuanghui International Holdings Ltd., had made attempts to sway the Russians to open up the market to its pork now that a company based in China owns it.
Even though trade of agricultural goods between U.S. and Russia isn’t that significant overall, the ban could be meaningful for the U.S. poultry industry, as poultry exports represent the largest chunk of exports in the food category
In 2013, the U.S. exported about 267,000 metric tons of chicken to Russia valued at $303 million. But the U.S. used to export a lot more chicken to Russia in the mid-1990s. Currently, chicken exports represent 7% of total U.S. poultry volume, compared to as much as 40% in the mid-1990s.
The USA Poultry & Egg Export Council and the National Chicken Council released a joint statement, which said “we do not expect that a Russian ban on U.S. poultry imports will have a great impact on our industry.”
Much of the poultry industry’s feelings about Russia’s ban on U.S. agricultural products is echoed by Graeff who says that the poultry industry has taken more market share domestically due to the decline of the U.S. beef cattle herd, which has resulted in tight beef supplies.
“Demand for poultry has increased [domestically] and we continue to see poultry exports to be very strong,” he said.
At the end of the day, Graeff isn’t convinced that Russia ban on U.S. food imports will make a dint in the agricultural economy “I do not think that the U.S. ag economy will be significantly or adversely impacted.”