Chicken prices nothing to crow about

  • 1998-12-10
  • Sandra L. Medearis
RIGA - It's the assault of cheap chicken from all sides that has Arvis Mukans lying awake these long winter nights. Frozen chickens with no bodies, just legs, waltzing into the Baltic market from Estonia, the Netherlands and America, unimpeded by tariffs, are killing him, or at least making his company drop its prices on fresh chicken products just to stay in business. Imports are increasing while poultry producer Kekava Broilers' turnover is getting smaller.

"The foreign firms are big. They sell the fillets and premium parts at home and export the legs and by-products to large wholesalers," said Mukans, trade manager for the chicken farm.

"Even producing 6 to 7 million tons a year, we can't realize the same economies of scale. This year we are working with losses."

Mukans has no problems with the Estonian chicken parts.

"They are not a danger to us, because we have a free border agreement with Estonia. Their prices are approximately the same. It is natural competition."

A similar deal with Lithuanian chicken exists, but not so for the other chicken from Holland and the United States.

"These products are very cheap. I think it must be that they don't pay tax at the borders," Mukans said.

Kekava Broilers, in Kekava, a village of 12,000 people about 15 kilometers from Riga, started in 1967 and grew. Operating continuously for the past 30 years, the enterprise supports about 500 employees and built the town a sports center, Mukans said. He comes from a Kekava Broiler family. His parents have worked at the plant for more than 20 years. When the people of Kekava go out to Sunday dinner, they more than likely go to Pie Martina (At Martins), a local restaurant that serves chicken eight ways.

The factory that is the main employer for the town has seen its turnover slip by 7 or 8 percent in the first nine months of 1998.

"We have had to reduce prices while our costs have gone higher," Mukans said. Kekava Broilers is already more costly to market because the products are fresh. They need refrigeration and have a limited shelf life, not like frozen chicken which can be kept and put on the market when the price is right.

Russia's crisis hasn't helped, Mukans said. The company has not been exporting to Russia, but is indirectly affected by customers' loss of purchasing power in eastern Latvia where there have been layoffs.

"If we don't lower the price, we can't sell chicken. Because people don't have much money this year, they have to buy the frozen. Our fresh chicken is much better. People prefer it when they have more money."

Latvia was the fourth largest importer of U.S. chicken in 1997, bringing in 28,400 tons, but surpassed that amount in the first nine months of 1998 by 10,000 tons according to the U.S.-based industry magazine "Poultry International."

Russia, Hong Kong and Mexico lead in U.S. chicken meat imports.