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Russia set to halt imports of U.S. beef, pork

By Theopolis Waters and K.T. Arasu

CHICAGO (Reuters) - U.S. pork and beef exports to Russia could come to a halt on Saturday following Moscow's requirement that the meat be tested and certified free of the feed additive ractopamine, a move analysts said smacked of political retaliation.

The move could jeopardize the more than $500 million a year in exports of U.S. beef and pork to Russia, and comes on the heels of U.S. Senate approval of a bill to expand bilateral trade that also sought to punish Russian human rights violators.

The United States asked Russia, the sixth-largest market for U.S. beef and pork, to suspend the requirement even as it warned domestic meat companies that Moscow might reject their pork shipments that contained ractopamine and stop buying pork from processing plants that produced pork with the drug.

Ractopamine is used as a feed additive to make meat leaner, but countries such as China have banned its use despite scientific evidence that it is safe. The United Nations has agreed on acceptable levels of the drug.

The U.S. Meat Export Federation told its members by email that since the U.S. Department of Agriculture had no testing and certification program in place for ractopamine, the Russian requirement could effectively halt U.S. pork and beef exports to the country by Saturday.

USMEF, a non-profit trade association, said more than 210 shipping containers of U.S. pork and beef valued at about $20 million were on their way to Russia.

Canada urged Russia to delay the requirement.

"We have asked Russia for a delay in the implementation of this decision to allow for a thorough and science-based discussion between Canadian and Russian officials," Canadian Agriculture Minister Gerry Ritz said in an email statement to Reuters.

Jacques Pomerleau, executive director of Canada Pork International, earlier said the Canadian Food Inspection Agency has provided meat processors with testing guidelines and is responsible for signing certificates to make sure the products meet Russian standards.

U.S. Department of Agriculture spokesman Matt Herrick offered to have further technical discussions with Moscow on the safety of ractopamine.

"We will continue to reach out to Russia to resolve our differences, as well as to encourage Russia to implement the (U.N.) Codex Alimentarius Commission's standards for imported meat products to help provide greater certainty, in keeping with their obligation as a World Trade Organization member," USDA spokesman Matt Herrick said.

"This is an important opportunity for Russia to demonstrate that it takes these commitments seriously," he said.

Russia joined the WTO in August after a 19-year wait.

The USDA's Food Safety and Inspection Service, in a note posted on its website on Friday afternoon, said: "Exporters are cautioned that Russia may reject U.S. pork shipments and delist producing establishments if ractopamine residues are detected in exported product."

FSIS also said at the moment it was not requiring meat companies for documentation attesting their pork was free of ractopamine before issuing its export certification.

RETALIATION

Analysts said the Russian move was linked to the Senate's passage of the trade bill and noted that prices for hogs and cattle in the United States were under pressure.

"This seems to be in retaliation to the Senate's passage of the trade bill with Russia ... there is certainly no doubt about it," Rich Nelson, chief strategist at research and brokerage company Allendale Inc, said.

He said Russia purchased 1.4 percent of U.S. pork production and 0.6 percent of beef production, adding that any suspension of imports from the United States would weigh on cattle and hog futures at the Chicago Mercantile Exchange.

Tyson Foods Inc, a leading U.S. meat company, and agriculture powerhouse Cargill Inc declined to comment on how a halt in exports would impact them, but both noted the U.S. and Russian governments were in discussions.

"We'd rather not speculate on what a halt in exports would mean to our business, but are hopeful the USDA and Russian government are able to resolve this issue quickly," Tyson spokesman Worth Sparkman said.

Russia's animal and plant health regulator said it would increase laboratory oversight of pork from three packaging plants in North America after ractopamine was found in meat shipped to Russia.

CME February hog futures ended 0.975 cent, or 1.2 percent, lower at 83.475 cents per lb. February live cattle futures fell 0.625 cent, or 0.5 percent, to 130.4 cents per lb.

Tyson shares were down 0.3 percent at $19.63 even as the Dow Jones industrial average rose 0.6 percent.

In its email, obtained by Reuters, USMEF said: "...This new requirement effectively means that the Russian market will be closed to pork and beef exports beginning this Saturday (December 8)."

USMEF spokesman Joe Schuele confirmed the email.

"The deadline is concerning because of an inability to meet this paperwork requirement," Schuele said.

Chief U.S. agricultural trade negotiator Isi Siddiqui will travel to Russia next week to meet with Russian officials to discuss agricultural trade issues, the U.S. Trade Representative's office said on Friday.

White House international economic affairs adviser Michael Froman could also be part of the delegation that is expected to press the Russian government to postpone the implementation of its ractopamine requirement.

Commerce Department data shows the United States has exported 213.681 million lbs of pork to Russia so far this year. In 2011, exports to Russia totaled 190.931 million lbs.

Russia imported 121.71 million lbs of U.S. beef and veal between January and September. Last year, such imports totaled 145.37 million.

USMEF data showed that U.S. beef exports to Russia in the first nine months of 2012 were valued at $203.7 million, while pork exports totaled about $202.9 million for the same period.

"My first inclination is how much of this is related to geopolitics and how much of this is the Russians trying to negotiate political issues through our pocketbooks," said Mike Zuzolo, president of Global Commodity Analytics.

"Without a doubt, this issue is weighing on both the hogs and cattle markets. All year long the lower-level dollar and the strong export pace have helped underpin our situation whenever domestic demand has weakened," he said.

(Additional reporting by Mark Weinraub in Chicago, Chuck Abbott in Washington, Rod Nickel in Winnipeg and Melissa Akin in Moscow.; Editing by Dale Hudson, Andrew Hay and Sofina Mirza-Reid)

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