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Weekly Overview: Another EU/US Trade War Looming? Bird Flu in India

29 October 2012

ANALYSIS - The first signs are emerging of an impeding trade war between the EU and the US over the use of the growth promoter, ractopamine, which is used in turkeys and other livestock. With low stocks, a poor maize harvest this year look likely to lead to shortages until the next harvest. An outbreak of highly pathogenic bird flu has hit a farm in southern India and a village poultry flock in Bhutan.

The EU and US could be heading for another trade war, similar to the one it had over the use of growth hormones in beef cattle but this time, the row is brewing over the use of ractopamine - a beta-agonist - as a feed supplement, which is used for boosting growth and increasing leanness in pigs, cattle and turkeys.

The latest turn of events in this saga came last week, when the Council of the European Union published its official response to the decision by Codex Alimentarius to set maximum residue limits for ractopamine, thus endorsing its use.

The decision by Codex was taken after a majority vote by the member nations. The majority was two.

The anger from the European Union at the Codex decision and the response by the council puts the EU on a collision course with countries such as the US and Canada, where the use of ractopamine is widespread. Some estimates have the use in pig feed of between 60 and 80 per cent of the US herd.

The European Union has stuck to its policy of refusing access to meat from animals that have been treated with ractopamine and has called for assurances that any meat entering the EU from countries where its use is common has come from animals that are free from the drug.

The EU stance is also supported by China, where the import of products for animals treated with ractopamine is also banned.

There is also a divergence between the maximum residue levels that have been set down by Codex Alimentarius and the US.

The more the two sides dig in, the greater the divergence and hostility will emerge - and all this occurred at a time when the US meat companies were in Paris at one of the largest European food shows, marketing their products that had just been allowed onto the EU market in greater amounts following the compromise in the beef hormone dispute.

Maize is likely to be in short supply worldwide in the coming months.

In recent years, any shortfall in the global production of maize has been made up by using surplus stocks. However, in recent times, the market has become very much tighter and for the first time in 17 years, global demand for maize has gone down, Jack Watts, senior analyst with the AHDB/HGCA told the Grain Market Outlook conference in London last week.

USDA estimates show a reduction in production from June forecasts of 375.7 million tonnes to 271.9 million tonnes this October, he said, and demand has also fallen from 301.6 million tonnes in June to 254 million tonnes in October.

However, the forecast for end stocks is also showing a steep drop, down from 47.8 million tonnes in June to just 29.2 million tonnes in October.

Mr Watts told the conference that because the feed forecasts and production are down, livestock herds are being rationalised.

An outbreak of bird flu has been reported in India in the last week. An outbreak of H5N1 highly pathogenic avian influenza was first seen in turkeys at a government-run farm in Bangalore and has led to the death or culling of more than 19,000 chickens and 13,000 emus as well as 4,000 turkeys. The authorities said the outbreak had been brought under control but egg producers in neighbouring states have expressed concerns about the possible impacts on exports. Bird flu has also been reported in a backyard poultry flock in Bhutan.

Jackie Linden

Jackie Linden

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