6 Min Read
* Russia requires testing for ractopamine
* USMEF says pork, beef exports to Russia could stop
* Russia move comes after US Senate passes trade bill
* Cattle, hog futures down
* USDA urges Russia to postpone requirement
By Theopolis Waters and K.T. Arasu
CHICAGO, Dec 7 (Reuters) - U.S. pork and beef exports to Russia could 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 measure by Russia - the sixth-largest market for U.S. beef and pork - comes on the heels of U.S. Senate approval of a trade bill to punish Russian human rights violators as part of a broader objective to expand bilateral commerce.
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.
Ractopamine is employed as a feed additive to make meat leaner, but countries such as China have banned its use. The United Nations has agreed on acceptable levels of the drug.
Canada moved swiftly to meet Russia's requirement, starting the testing process on Friday.
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, said Jacques Pomerleau, executive director of Canada Pork International, an industry body.
The USDA called on Russia to suspend the requirement immediately and 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.
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 that 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 were 0.900 cent, or 1.1 percent, lower at 83.55 cents per lb at 1:05 p.m. CST (1905 GMT). February live cattle futures fell 0.60 cent, or 0.5 percent, to 130.4 cents per lb.
Tyson shares were down 0.5 percent at $19.59 even as the Dow Jones industrial average rose 0.5 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.
The email said chief U.S. agricultural trade negotiator Isi Siddiqui and White House international economic affairs adviser Michael Froman were expected to travel to Moscow next week to press the Russian government to postpone the implementation of its requirement.
Commerce Department data shows the United States has exported 213.681 million pounds 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.