Since Russia banned imports of U.S. pork, chicken and beef in February due to the use of ractopamine, U.S. meat shipments to Russia have fallen to almost nothing.
The Russian ban on U.S. pork, chicken and beef imports due to use of the feed additive ractopamine isn’t likely to be lifted soon. Much to the chagrin of Australian beef producers, however, Brazil – logging almost 10,000 tons/month of additional beef exports to Russia – is the big winner in filling the void left by the U.S.
Many folks assume that the U.S. ban is more related to political issues between the U.S. and Russia than the issue of ractopamine. In fact, the New York Times recently stated that the trade retaliation actually was due to recent legislation in the U.S. punishing Russian officials linked to human rights violations.
The belief was that once Russia became a member of the World Trade Organization (WTO), these sorts of trade disputes would cease. This was apparently a naïve assumption as the complexity of trade disputes hasn’t diminished with Russia’s inclusion in WTO last August; in some respects, it’s become even more complex.
In 2010, Russia set a target in the Russian Food Security Doctrine that would see at least 80% of Russia's demand for food to be covered by its own production. According to the Russian Agriculture Ministry's projections announced in early March, the actual figure will reach 82.3% later this year.
A Closer Look: Beef Markets Face International Headwinds
With reaching this goal, Russia has been generating large grain surpluses and is now looking to expand into new markets. Recently, it secured a 1-million-ton contract to export grain to Brazil free of import tariffs.
This is one of many examples highlighting the ties between Russia and Brazil that are growing stronger, and will no doubt be at the expense of other trading partners like Australia. In fact, Brazil and Russia signed several recent agreements to increase trade and to advance cooperation in defense, energy and agriculture. It’s estimated the agreements will expand trade from $5.9 billion (US) to $10 billion in the next three years.
Meanwhile, on the meat side of things, the issues that existed over Brazil's first BSE case are being resolved quickly with advanced talks having taken place to eliminate sanitary hurdles that are currently slowing Brazil's meat sales to Russia.
Russia decided to ban imports of U.S. beef, pork and turkey on Feb. 11; since then, Gennady Onishchenko, the head of Russia's consumer safety watchdog, was quoted by Interfax saying "Apparently the ban on practically all U.S. meat and meat products will be long term."
Russia's Veterinary and Phyto-Sanitary Surveillance Service claims the U.S. has failed to show meat imports free of the growth stimulant ractopamine. Russia says it would consider lifting its ban on U.S. imports if it could be guaranteed to come from ractopamine-free producers. The U.S. so far hasn’t given this guarantee, though a delegation of U.S. trade officials was in Moscow last week.
Ractopamine is banned in over 160 countries despite scientific evidence that it is safe. Ractopamine isn’t licensed for use in Australian beef production, but is approved for use in pork. Meanwhile, almost two dozen countries have approved ractopamine as safe for use, but the EU, China and Russia have banned use of the drug.
Interestingly, U.S. beef exports to Hong Kong this year have almost tripled in volume – up 253%, from 2,666 tons to 6,760 tons, despite the ractopamine issue. These actions imply that mainland China has decided not to impose restraints on the U.S.
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In August 2012, Taiwan also lifted a five-year ban on U.S. beef after it agreed to allow minimal traces of ractopamine. Part of the incentive to resolve this issue was to get Taiwan back on track in the Trans Pacific Partnership (TPP) trade discussions.
The whole issue of ractopamine highlights the complexity of trade negotiations between Russia, Brazil and the U.S., and to a lesser extent Taiwan. It also highlights the susceptibility of export markets to political footballs, like ractopamine, that use animal welfare and food safety issues to achieve other trade outcomes.
Russia may well have a genuine concern about the use of ractopamine, but there’s no doubt it will use food safety issues like this to protect its own interests when needed. Equally, Russia will also use them to advance its economic progress as it strives for its own self-sufficiency in food production.
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