April 8 (Bloomberg) -- European Union pig farms are missing out on a boom in U.S. prices after Russia banned imports from the 28-country bloc, spurring Brussels to file a World Trade Organization case today after talks to reopen trade failed.
Russia, the biggest importer of pork from the bloc, halted purchases in January after the EU found African swine fever in four wild boars in Lithuania and Poland. EU pork shipments to Russia last year were worth about 1.4 billion euros ($1.9 billion), or a quarter of its pigmeat exports, according to the European Commission, the EU regulator in Brussels.
The EU had called for Russia to end its blanket ban on the bloc’s pork in favor of restrictions limited to regions affected by African swine fever, a fatal disease for pigs that’s already present in Russian herds, Frederic Vincent, a spokesman for the EU Health Commission, said by telephone last week. Russian authorities have said the EU hasn’t done enough to prove the disease hasn’t spread to other parts of the bloc, according to food-safety watchdog Rosselkhoznadzor.
“Russia’s blanket ban on European pork is clearly disproportionate and goes against WTO rules,” EU Trade Commissioner Karel De Gucht said in a statement today. “This was a very minor case of a few infected wild boars at the borders with Belarus which was immediately contained by the relevant European authorities.”
Russia’s position on restricting EU pork is unchanged after the WTO filing, and authorities will continue to protect the country’s national interests, Alexei Alekseenko, spokesman for Rosselkhoznadzor, said by phone from Moscow today. Importing pork from the EU would increase risks of African swine fever spreading in Russia as the country seeks to contain the disease in its own territory, he said.
“This is not a trade problem, it’s a security problem,” Alekseenko said. “Our duty is to ensure biological security of the country.”
Pig prices in much of Europe are lower than last year, with values in Germany, the top EU pork producer, dropping to a three-year low in February, according to Damme, Germany-based farmers’ group Interessengemeinschaft der Schweinehalter Deutschlands. At the same time, futures on the Chicago Mercantile Exchange surged to a record last month as U.S. farmers contended with another disease outbreak, the porcine epidemic diarrhea virus that can be deadly for piglets.
“The price of pig meat has gone down in Europe and up everywhere else in the world,” Richard Brown, a director at Ferney-Voltaire, France-based market researcher Gira, said in a telephone interview before the WTO filing. “The world pig meat trade is absolutely, seriously upset by these two disease events. In Europe, it’s a loss of our most important market, in Russia, and it’s very damaging especially for the German pig industry.”
African swine fever, a viral disease for which there is no vaccine, is deadly for pigs and harmless for humans, according to the United Nations’ Food & Agriculture Organization. The disease has persisted in Russia since late 2007, and more than 600,000 pigs died or were slaughtered to stem its spread in the country between 2007 and mid-2012, the UN estimates. It also has been discovered in Belarus and Ukraine.
European authorities first detected African swine fever in wild boars in Lithuania on Jan. 24 and in Poland on Feb. 17 near both countries’ borders with Belarus, according to the European Commission. The EU said today that Russia accepts pork from Belarus despite notified cases of the disease there.
In its WTO case, the EU is requesting formal consultations with Russia under its dispute-settlement procedures. If the WTO consultations do not reach a satisfactory solution within 60 days, the EU may request the WTO set up a panel to rule on the legality of Russia’s measures.
German spot prices for pig carcasses are about 1.61 euros a kilogram ($1 a pound), or 4 percent less than a year earlier, German farmers’ group ISN said last week. The price slid to 1.45 euros in February, the lowest since February 2011.
Prices were also lower than last year in France, Denmark, the Netherlands and Poland, according to ISN. Hog futures in Chicago rose to a record $1.33425 a pound on March 18, and are 32 percent higher than a year ago after falling 2.1 percent today to $1.1915 a pound.
Russia ranks as the world’s second-biggest pork importer, after Japan. Consumer prices for pork in the country were about 239.6 rubles a kilogram ($3.06 a pound) on March 1, up 3.7 percent from the previous year, according to the Russian Agriculture Ministry. Russia increased purchases of pork from Brazil since the EU restrictions, and may start importing from China in three months after inspecting plants, Rosselkhoznadzor’s Alekseenko said.
“There is a shortage of production in Russia in the pork sector, so Russia needs to import,” Jean-Luc Meriaux, the secretary general of the European Livestock and Meat Trading Union, said by telephone from Brussels before the WTO filing. “The EU industry supports a dialog with Russia. For the time being there is no good result.”
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