Paraguay’s Foot-and-Mouth Cases Threaten Beef Exports

Paraguay reported an outbreak of foot-and-mouth disease in cattle in the central San Pedro department, its first occurrence of the livestock virus in eight years, threatening $880 million in annual beef exports.

Clinical signs of the disease were observed in 13 cattle on a farm in San Pedro, and confirmed by laboratory testing yesterday, according to an alert from Paraguay’s National Service for Animal Quality and Health published today by the Paris-based World Organization for Animal Health, or OIE.

Beef is Paraguay’s second-largest export after soybeans, with shipments previously expected to rise in 2012 on a growing herd and the country’s “good” sanitary status, the U.S. Department of Agriculture said in an Aug. 31 report. Foot-and- mouth outbreaks typically result in “heavy” trade restrictions, including bans on shipments of uncooked meat, according to the OIE.

JBS SA (JBSS3), the world’s largest beef exporter, said it suspended shipments abroad of the meat from its unit in the South American nation. Minerva SA, Brazil’s third-largest publicly traded beef producer, said it also halted slaughtering at a plant because of the outbreak.

Contagious Illness

Foot-and-mouth disease is one of the most contagious livestock illnesses and can kill young animals, according to the OIE. The virus affects cloven-hoofed animals including cattle, pigs and sheep.

Measures to be applied include culling of animals to stamp out the disease, movement controls and vaccination in response to the situation, the OIE said. The outbreak, the first in Paraguay since July 2003, is continuing and there will be weekly follow-up reports, the organization said.

The infected farm has 819 susceptible cattle, according to the alert. The animals that tested positive for foot-and-mouth disease were less than two-years-old and part of a herd of 110 animals in a production unit dedicated only to cattle farming, the OIE said.

Paraguay’s shipments of fresh, chilled and frozen meat from January to June were $445.5 million, 16 percent of the country’s primary-industry exports, while soybean exports came to $1.24 billion, based on data from the Ministry of Industry and Commerce.

Beef Exports

Paraguay was forecast to export 250,000 metric tons of beef in the 2011-12 marketing year starting October and 300,000 tons in the following year, according to the USDA’a Foreign Agricultural Service. The value of 2010 beef exports was $880 million, based on the USDA report.

The main markets for exports in 2012 were expected to be Chile for chilled beef and Russia for frozen beef, the USDA said. The countries account for 70 percent to 75 percent of Paraguay’s shipments of the meat, the USDA said.

Paraguay’s beef industry has attracted domestic investment as well as investors from Brazil, Uruguay and Europe, the USDA said. Government officials forecast Paraguay’s cattle herd will increase to 20 million animals by 2020 from 13 million now, the USDA said, in its Aug. 31 report.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net