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May 22, 2017

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End in sight for China’s US beef ban

TALKS on restarting US beef exports to China are moving fast and final details should be in place by early June, according to the US Department of Agriculture, allowing American farmers to vie for business lost by rival Brazil.

As part of the deal, US ranchers are set to halt the use of growth-promoting drugs to raise cattle destined for China and to log the animals’ movements, USDA said.

The two sides are negotiating to meet a deadline, set under a broader trade deal last week, for shipments to begin by mid-July.

Finalizing technical details in early June should mean beef companies, such as Tyson Foods Inc and Cargill Inc, can sign contracts with Chinese buyers to meet the deadline, USDA said.

China banned US beef in 2003 after a US scare over mad cow disease. Previous attempts by Washington to reopen the world’s fastest-growing beef market failed. But now, the quick progress of the latest talks is raising US farmers’ hopes.

“Both sides feel the urgency to get it done by the deadline,” said Joe Schuele, spokesman for the US Meat Export Federation, which represents Tyson, Cargill and other meat companies.

The timing of the new deal comes as Brazil, the world’s top beef exporter, is mired in scandal and rival shipper Australia is suffering from a drought that is hurting production, analysts said.

China accounted for nearly a third of the Brazilian meat packing industry’s US$13.9 billion in exports last year.

But in March, China briefly banned Brazilian imports after police there accused inspectors of taking bribes to allow sales of rotten and salmonella-tainted meat. JBS SA, the world’s largest meatpacker, was involved in the probe and in separate allegations that Brazil’s president conspired to obstruct justice with the company’s chairman.

The food-safety probe hit Brazil’s beef exports, which fell by 24.6 percent to US$378 million in April from March, according to an industry group that represents meat processors accounting for 90 percent of Brazil’s exports.

“This is a very opportune time for the US to step up,” said Derrell Peel, an agricultural economist at Oklahoma State University.

China’s appetite for beef has climbed in recent years. In 2003, imports totaled just US$15 million, or 12,000 tons, including US$10 million from the United States, according to USDA.

To reopen US trade, China has accepted a US proposal in principle that would require producers to document locations where cattle raised for beef exported to China are born and slaughtered, USDA said. The system would be less onerous than tracking cattle throughout their entire lives, during which they can be kept at up to four different locations.

Under another rule, US beef exported to China must be raised without a class of growth-enhancing drugs known as beta-agonists that includes Elanco’s Optaflexx.

US beef shipments to China will also have to come from cattle under the age of 30 months, according to USDA. Most US cattle will meet that requirement, the US Meat Export Federation said.

The terms of the deal are a win for the United States over Canada, which is approved to ship only frozen beef to China.

China already bans meat from Canadian cattle fed with Optaflexx.


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