The Food Safety Inspection Service (FSIS) of USDA has given approval for six pork processing plants in the Brazilian state of Santa Catarina to export fresh pork to the U.S. After an 18 month review, Brazilian inspectors have been determined to be available in sufficient numbers and properly trained to establish the compliance of plants in the state. This approval will likely encourage other pork importing countries to consider Brazil as a supplier and further harmonize standards.
The reconsideration of Santa Catarina for pork exports grew out of an April 2010 agreement to negotiate a settlement of a dispute won by Brazil against the U.S. at the WTO on subsidies for U.S. export credit programs and cotton. The U.S. agreed to publish a proposed rule to recognize Santa Catarina as free of foot-and-mouth disease, rinderpest, classical swine fever, African swine fever, and swine vesicular disease, based on World Organization for Animal Health guidelines.
All of Brazil is not free of the diseases certified for Santa Catarina. WTO rules provide for the regionalization when possible of trade-related sanitary and phytosanitary standards. This allows exports from regions within a country that are free of an animal disease even if the disease is present in other parts of the country. The importing country makes a risk assessment to decide if trade restrictions can be defined regionally so international trade can occur without risk to domestic production and human health in the importing country. Processors in the exporting country need to be certified by the exporting country and may be subject to audits by the importing country.
The pork industry in Brazil believes approval for shipments to the U.S. will have a much wider impact than just in the U.S. market. According to a Dow Jones Newswire story, Pedro de Camargo Neto, president of the pork industry association Abipecs, said he doesn’t foresee “large volumes” of pork going to the U.S., but the measure represents an “indisputable seal of quality.” The U.S. inspection process has sufficient rigger to carry weight in other markets. The Brazilian Agriculture Minister looks to markets in China, Japan and South Korea as growth opportunities.
Brazil is expected to be the world’s fourth largest producer of pork in 2012 at 3.3 million metric tons (MMT) on a carcass weight basis according to the Foreign Agricultural Service of USDA, but far behind the big countries of China at 51.3 MMT, the EU at 22.5 MMT and the U.S. at 10.5 MMT. FAS expects Brazil’s pork production to be up only 2 percent this year because of the drop in exports to Russia. Brazil will also be number four in exports at 0.57 MMT, but the spread is much narrower with the U.S. at 2.25 MMT, the EU 1.9 MMT and Canada at 1.16 MMT. Brazil’s exports will be down slight in 2012 from 0.62 MMT in 2011 and 0.71 MMT in 2010.
Part of the decrease in Brazil’s export volume is due to delisting of plants authorized for sales to Russia, its largest market. The U.S. and other exporters to Russia have had similar problems. According to the U.S. Agricultural Attaché in Brazil, exports on a product weight equivalent basis were 234,800 MT in the first half of 2011, down from 238,300 MT in the first half of 2010. Russia was still the largest market at 107,200 MT, down from 120,600 MT in 2010. Unconfirmed industry estimates show pork exports to Russia for the entire 2011 calendar year to be down 40 percent. Hong Kong was second each year at roughly 35,000 MT, with Ukraine number three both years at 17,800 MT in the first half of 2011, and 20,200 MT in the first half of 2010. Brazil’s MECOSUR partner Argentina was fourth both years. China, Japan, South Korea and the U.S. were all at zero and the EU imported small quantities.
Brazil’s meat exports extend beyond just pork. It was the number one exporter of beef in 2007-10, but barely beaten by Australia in 2011, and expected to be number two again in 2012 at 1.375 MMT compared to Australia at 1.380 MMT. India is expected to be number three at 1.275 MMT. Brazil will again be the top young chicken exporter at 3.465 MMT compared to number two U.S. at 3.039 MMT and the EU as number three at 1.12 MMT.
Brazil and the U.S. have a stake in a harmonized, science-based meat inspection system throughout countries that trade pork. Removal of sanitary and phytosanitary barriers to trade is a major issue where tariff barriers have been eliminated or sharply reduced. They are often seen as non-tariff barriers that protect high cost producers from imports. A counter force to this movement is the heightened concern about the safety of imported food and the spread of disease to domestic production. These are concerns that are recognized under WTO rules.
The U.S. should be pleased that Brazil believes that the U.S. approval of pork imports from Brazil is an indicator of its efforts to produce a quality product. While international standards setting groups make commendable efforts to set science based ones, the best harmonized standards are those that develop in the marketplace as costs and consumer satisfaction drive the hard decision making.
The U.S. National Pork Producers Council (NPPC) has pointed out that Brazil has a science-based issue of its own in pork standards. NPPC supports regionalization and recognition of Santa Catarina as free of foot-and-mouth disease and other swine diseases, but is frustrated by Brazil’s unjustifiable trichinosis-related import restrictions on U.S. pork. The incidence of trichinosis in the U.S. pork industry is one in 300 million. This plus the high level of biosecurity in the U.S. industry means there is no valid, science-based reason for Brazil to impose import restrictions on U.S. pork.
Meat producers in exporting countries and consumers in importing countries have a personal stake in a harmonized, science-based inspection system that facilitates high quality products at affordable prices. No one country, including the U.S., has solved all the problems. Countries need to work together to harmonize standards to meet consumers demands. Harmonization of regulations will be most effective when all stakeholders across markets take their cues from the marketplace.
Ross Korves is an economic policy analyst with Truth About Trade and Technology