The U.S. Meat Export Federation this week released an issue brief focused on the recent action by Russia to ban the import of meat with ractopamine residue, explaining that the meat industry has significant margins to lose as a result of the bans.
Russia implemented a full ban in February, just a few weeks after its accession into the World Trade Organization was finalized. U.S. Trade Representatives denounced the Russian decision, and USMEF says the decision has prompted action in the meat packing industry to segregate meat products with and without the residues.
Racopamine is a veterinary drug approved for use in the U.S. and approved by Codex standards – the same standards used by the WTO.
USMEF says several large packers were considering changes to their operations to improve ractopamine segregation, raising several questions which have implications for the meat industry's participation in the global meat trade.
Though Russia's actions are the key player in the debate, China last week notified the USDA of its intention to implement new enforcement measures for its zero tolerance policy for ractopamine residues in U.S. pork imports.
Packer's changes require closer look at economics
Although Russia only accounts for roughly 7% of U.S. beef exports and 4% of pork exports, this understates its importance to the U.S. red meat industry that in 2012 found willing buyers for American pork in 116 different countries and beef in 132.
Last year Russia imported $566 million of U.S. beef and pork, but most of this trade was in only a few items (inside and gooseneck rounds, beef livers and hams). Because Russian buyers pay a premium for these items over customers in other foreign markets or here at home, where excess supplies of round and ham cuts as well as livers often put downward pressure on prices, the closure of the Russian market will have a larger negative impact on live hog and cattle prices here in the U.S. than the value of the lost trade alone, USMEF says. This is because these items will be sold at lower prices and the added supply will depress prices on the U.S. market.