MMM 403

March 29, 2001

The Impact of The Foot and Mouth Embargo

P.J. Rathwell, Extension Ag Economist
Harold Hupp, Extension Animal Scientist

The U.S. Department of Agriculture announced that it is temporarily prohibiting the importation of swine and ruminant animals, fresh swine or ruminant meat (chilled or frozen), and other products of swine and ruminants from the European Union.  Cooked pork products are exempt from this embargo.

This action is being taken following confirmation of foot-and-mouth disease in France, the United Kingdom, the Netherlands and Northern Ireland.  These measures are part of a USDA coordinated prevention program to insure the disease does not spread into the United States. 

Funk and Wagnall’s encyclopedia defines Foot-and-Mouth disease (also referred to as Hoof-and-mouth disease) as a highly contagious disease affecting cloven-hoofed animals such as cattle, swine, sheep, goats and deer. 

The U.S. has experienced nine distinct outbreaks of foot-and-mouth disease; the most serious occurred in 1914 invading 22 states and the District of Columbia.  The most recent outbreak was in California in 1929.  USDA’s regulatory procedures and an alert industry have been able to quickly confront outbreaks and minimize the outbreak’s impact on the U.S.’s animal industry.  But, because of the disease’s highly contagious nature, it remains a threat to the U.S.’s livestock industry. 

The USDA estimates that the dollar impact of our ban to European Union producers, based on 2000 figures, to be $278 million.  Over 98 percent of their shipments are chilled or frozen pork products.  However, in 2000, the U.S. also imported from the European Union approximately $1.31 billion worth of other dairy, livestock and poultry products that are not specifically prohibited.  Many of these products are now under review by Animal and Plant Health Inspection Service of the USDA.

The following list is a summary of the European Union items currently banned by APHIS:

1.      Live ruminants
2.      Live swine
3.      Fresh (chilled or frozen) meat of ruminant or swine
4.      Fresh (chilled or frozen) products derived from ruminants or swine (other than meat and milk/milk products)
5.      Fresh (chilled or frozen) organs gland, extracts or secretions derived from ruminants or swine—exceptions are allowed under permit, with additional processing for pharmaceutical or biological purposes
6.      Ruminant or swine semen
7.      Ruminant or swine embryos

The ban will impact many farmers in the European Union.  This disease outbreak following the publicity on BSE will surely affect animal agriculture and the consuming public for years to come in Europe.  But, this impact is only a drop in the bucket if the world community does not get a handle on the disease. 

Table 1 shows the dollar value of total beef, swine and sheep imports into the United States by country of origin for 2000.  It is interesting to note the geographic distribution of meat imports into the United States.  European shipments are primarily pork.  Imports from Australia and New Zealand are beef and lamb while imports from the other Americas are primarily beef.  Canadian shipments are primarily beef and pork. 

USDA’s temporary ban is currently affecting producers in the European Union (Sweden, Finland, Denmark United Kingdom, Ireland, Netherlands, Belgium, Luxembourg, France, Germany, Austria, Spain, Portugal, Italy, and Greece).  The other Western European countries of Iceland, Norway, Switzerland, Gibraltar and Malta are not part of the ban.  Eastern European countries including Czechoslovakia, Hungary Poland, the former Yugoslavia, Albania, Romania and Bulgaria are also not affected by the ban.

Total world shipments of pork and pork products to the U.S. in 2000 are estimated at $997 million.  European Union shipments of beef, veal and pork products to the U.S. in 2000 amounted to about $264 million.  Fresh pork and pork products accounted for over $263 million of this total.  The countries in the news today (the United Kingdom, Ireland, France and the Netherlands) shipped a total of $26.4 million in 2000 of which only $20.2 million was chilled/frozen pork or pork products.

The major exporter of pork and pork products from the European Union to the U.S. is Denmark with exports of over $190 million in 2000.  Denmark has not had any confirmed cases of foot and mouth disease but is part of the overall European Union ban by the USDA.  In contrast, Canada exported over $534 million of pork and pork products to the U.S. in 2000.

The major exporters of mutton, lamb and goat meat to the U.S. are Australia and New Zealand.  Total shipments were over $214 million in 2000.  Australia shipped $131 million and New Zealand shipped $82 million.  There were no shipments of mutton, lamb or goat products from the European Union.

Beef shipments to the United States were over $2.4 billion in 2000.  Canada, Australia and New Zealand are by far the major exporters of beef, veal and pork to the U.S., shipping $981, $670, and $430 million to the U.S., respectively, in 2000.  These three exporting partners account for over 87 percent of the U.S. beef imports.  The European Union shipped about $7 million in 2000.  South America (primarily Argentina and Brazil) shipped $317 million worth of beef and beef products.

No American country, at this time, is included in the ban.  But many Latin and South American countries have had an on-again-off-again battle with foot and mouth disease for many years.  This has been a major stumbling point with respect to Argentina, Chile and Brazil becoming partners in the North American Free Trade Agreement (NAFTA).  Widening of the ban to include South American countries would significantly impact their economies and possibly lead to higher beef prices in the US.

The current projected impact to the U.S. consumer is a slight rise in the retail price of pork products.  Significant portions of Danish pork exports are “baby back ribs.”  This is a very popular meat item with the American consumer.  Increased shipments from Canada might offset lower Danish exports.  But, consumers could still see an increase in the retail price of pork ribs this summer.  It is also quite likely that the American pork producer can and will respond, increasing pork production and quickly adjusting to a shortage that might occur from a curtailment in Danish exports.

In the longer term, if the ban were extended to South American countries an increase in beef production by U.S. beef producers would be exceeding slow.  Shortages would likely occur in hamburger and processed meats resulting in higher retail prices. 

This impact evaluation is at best speculation.  Affected countries are taking severe measures to combat this disease.  If their actions are successful then this real problem might be averted for both the U.S. producer and the consumer.

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updated 4/10/01