Last year the Russian government set December 7, 2012 after which the U.S. and other suppliers were required to certify that pork and beef exports were free of ractopamine residues. In mid-February China announce that all pork imports from the U.S. would have to be third party certified as ractopamine residue-free. Taiwan provides an acceptable residue level for beef, but requires pork be residue free.
Ractopamine hydrochloride, known commonly as Paylean, is a feed additive that shifts energy use from fat growth to promoting the increase of muscle fiber diameter and the growth of lean muscle protein. It increases carcass leanness and dressing percent and improves feed efficiency and rate of weight gain. The U.S. Meat Export Federation estimates the use of ractopamine adds $5 per hog to producer profitability. It was approved in the U.S. in 2000 and Canada in 2006 and is now approved in 26 countries including Australia, Brazil, Hong Kong, Japan, Mexico and New Zealand. It is not approved for use or imports in the EU, China and Russia.
Last year the Codex Alimentarius Commission, better known as Codex, adopted on a 69 to 67 vote with 50 members not voting maximum residue level (MRL) standards for ractopamine of 10 parts per billion (ppb) in pork and beef muscle meat, 40 ppb in livers and 90 ppb in kidneys. These are lower than the U.S. standards set by the Food and Drug Administration of 30 ppb for beef and 50 ppb for pork. Codex was established by the UN Food and Agriculture Organization and World Health Organization in 1963 to set food standards and codes of practice that contribute to the safety of food trade. WTO members are to comply with Codex standards unless they have a risk assessment to justify more stringent standards. A country cannot be forced under the WTO agreement to import a product its citizens refuse to eat. Codex standards allow a country importing pork and beef to use an international scientific standard for ractopamine residue.
Neither China nor Russia has provided clear scientific or food safety reasoning for setting the acceptable level of residue at zero. The EU has also continued its ban on use in the 27 countries and imports with residue. Taiwan took a split position by accepting a 10 ppb MRL for ractopamine residue for imported beef but retaining a zero tolerance for imported pork. Taiwan was seeking a political compromise to restart talks with the U.S. under a bilateral Trade and Investment Framework Agreement that have been stalled for six years because of the beef import issue. Pork is a much larger political issue for the Taiwanese government because ten times as much pork as beef is consumed and only a small amount of beef is raised in the country, while most of the pork consumed is domestically produced.
Russia has been providing low cost loans and other incentives to encourage cattle and swine production, but it continues to be a relatively high-cost producer. Prior to joining the WTO last September, Russia had no external restraints on production incentives or tariffs on imported meat. Now it has limits on tariffs and production incentives, but the biggest change is the requirement to comply with the Codex standards on imported meat. By banning even traces of ractopamine, Russia increases the cost of production for imported meat and limits supply. Russia has been a difficult trading partner and joining the WTO has not changed their practices.
China is the world’s biggest producer and consumer of pork, roughly half of world supply, and imports when needed to balance supply with demand. An analysis from the Economic Research Service of USDA released a year ago concluded that China is a relatively high cost producer of pork, particularly with imported corn. The Chinese government manages the retail price of pork within a narrow range by storing pork when prices are low and releasing supplies when prices increase. Increasing the cost of producing imported pork and restricting supply makes their supply management program easier to operate.
The Russian and Chinese beef and pork markets are commodity markets that are managed by their respective governments. They purchase some products from the U.S. and other producing countries that are in lower demand in other importing countries and support world prices for those products. A loss of those markets would result in a lower volume of sales and lower prices for products for which China and Russia support world market prices. The U.S. exports 25 percent of the pork produced in the U.S. and cannot afford to lose either of the two markets.
Smithfield Foods has announced that it can meet the demand for ractopamine-free pork in those markets because it has a demand driven market structure. Other suppliers may also be able to make similar claims. Russian is apparently paying premium prices to get pork from the EU. If the supply of ractopamine residue-free pork exceeds demand, prices will decline to the commodity level.
Codex has had a breakdown in its approval system that has allowed some countries to use this narrow decision on ractopamine to create a non-tariff barrier to trade. New technologies to improve production efficiencies and lower costs will continue to be developed. When proven safe, these products should be allowed to be added to supply chains. Hopefully, the Codex decision can be revisited in coming years with a more definitive conclusion. Until then, the U.S. government should continue to be guided by the science for ractopamine.
Russia and China are clearly wrong in having a zero tolerance for ractopamine in pork and beef. A zero tolerance for any commonly used product is hard to consistently achieve. When a supplier like Smithfield believes it can meet that tolerance on a consistent basis, it should be allowed to supply product to the marketplace without the need for government certification of that fact.
Consumers in Russia, China, Taiwan, the EU or anyplace else have the right to seek out supply chains that deliver products with the specific attributes desired by the consumers, including ractopamine free pork and beef. But, governments should not use non-science-based import requirements to create non-tariff barriers to trade that prevent high quality, competitively priced products from entering the marketplace. Consumers should be the ultimate decision makers on quality and price.
Ross Korves is an Economic Policy Analyst with Truth About Trade & Technology (www.truthabouttrade.org). Follow us: @TruthAboutTrade on Twitter | Truth About Trade & Technology on Facebook.