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Meat sellers' stock falls as China restricts some imports

by 5m Editor
17 July 2007, at 12:49pm

US - Stocks of several major US meat producers dropped on Monday after news spread that China, citing safety concerns, had restricted some poultry and pork imports.

But the impact is likely to be slight unless the restrictions are long-lived, expand or fall victim to increasing tensions between the two countries over food-safety concerns.

"In the near term, it's not a big deal. But if it is sustained, then it becomes a big issue," says Parr Rosson, an agricultural economist at Texas A&M University.

Shares of Tyson Foods (TSN) — the world's largest processor and marketer of chicken, beef and pork — fell 0.5 per cent Monday to close at $23.78. Shares of Sanderson Farms, (SAFM) the No. 4 poultry producer, lost 2.7 per cent to $46.58.

Rosson says the Chinese appear to be "largely retaliating" for U.S. restrictions imposed on some Chinese products this spring after tainted pet-food ingredients from China sickened and killed dogs and cats.

While news of the restrictions came to light Friday, Tyson and Sanderson say they learned from China in early June that several US plants were "delisted" from exporting. One of Tyson's plants was targeted because raw chicken reportedly contained salmonella bacteria, and one pork-processing plant for product allegedly containing ractopamine, a feed additive approved for use in the USA but not in China.

Except for those plants, Tyson says it continues to ship product to China. In fiscal 2006, China accounted for 8 per cent of Tyson's international chicken sales and 4 per cent of its international pork sales. Under US rules, salmonella is not considered an adulterant in raw chicken, though it is in cooked chicken.

Sanderson says two of seven plants were suspended from shipping frozen chicken feet to China because officials there in May detected low — but higher-than-allowed — residues of a chemical that battles parasites. Sanderson has been working with China since June to rectify the situation, says Mike Cockrell, chief financial officer.

Source: USA Today

5m Editor