On Aug. 7, Russia issued a decree banning the import of many agricultural items – including pork and pork products¹ – from countries that have imposed economic sanctions on Russia as a result of the ongoing conflict in Ukraine. The ban is to be in effect for a period of one year, and the list of affected countries includes the United States, Canada, Australia, Norway and the 28 members of the European Union.

This action will have a limited – though not insignificant – impact on U.S. pork exports, because of restrictions already imposed by Russia some time ago. Russia suspended all imports of U.S. pork in February 2013, due to its policy regarding the use of beta agonists in livestock production. U.S. pork was shut out of the Russian market until March of this year, when Russia agreed to resume imports of U.S. pork produced under certain conditions, including strict documentation that animals from which the pork is derived have never been fed beta agonists.

While only two U.S. pork slaughter plants had regained approval to export to Russia, monthly shipments had been increasing steadily prior to the Aug. 7 suspension. June exports (the last month for which official results are available) were quite large at 9,371 metric tons valued at $34.3 million. Weekly export data indicate that an additional 12,000 mt were exported in July and 5,000 mt in the first week of August, plus about 15,700 mt had been sold for future delivery.

The re-emergence of Russia as an export destination was a factor in propelling ham prices to record levels in July. Heavy bone-in ham prices were still $1.39/lb. in the first week of August – up 62% from a year ago – but prices plummeted following announcement of Russia’s import ban. Record-large exports to Mexico should help soften the impact of the Russia closure, but there will definitely be downward pressure on prices in the near term.

The import ban will have no immediate impact on the EU – which is historically Russia’s largest pork supplier – because Russia had already suspended imports of EU pork due to findings of African swine fever in EU member states Lithuania, Poland and Latvia. This ban has been in effect since Jan. 30, and the World Trade Organization recently established a dispute settlement panel to address the impasse. With its pork locked out of the Russian market for more than six months, the EU has been shipping significantly larger quantities to key Asian markets including Japan, South Korea, the Philippines and Taiwan.

“One of the first questions raised when Russia imposed its import ban was whether competition from European pork would intensify in Asia,” says U.S. Meat Export Federation Economist Erin Borror. “The answer to this question is decidedly ‘yes’ – but that scenario has already been in place since the end of January.”

The pork supplier most impacted by Russia’s import ban is likely to be Canada. Through June, Russia was Canada’s third-largest pork export market at 80,539 mt (valued at $248 million) – more than double last year’s pace and accounting for about 15% of Canada’s total exports. With the United States accounting for 36% of Canada’s export value, Russia was taking nearly one-fourth of Canada’s “non-U.S.” exports – in value terms – prior to the import ban.

“Canada is already a fierce competitor in Japan, recently expanding its chilled market share. But Canadian pork faces some major challenges elsewhere in Asia – especially in Korea where it lacks the benefit of lower tariffs that other suppliers have achieved through free trade agreements,” Borror says. “European pork has also recently cut into Canada’s market share in China, the Philippines and Taiwan. So we expect Canada to intensify its focus on the Western Hemisphere to make up for the closure of the Russian market. In addition to the United States, this will likely include Mexico and other markets in Latin America.”

As for Russia, it must now rely almost entirely on Brazil and Chile for its pork imports, which were already running about 40% below last year’s low levels.

“With European pork ineligible for the Russian market and the United States having only limited access, this has been a difficult year for Russia’s pork importers and processors,” Borror says. “Russian officials just announced that they will begin allowing pork imports from China, but have yet to release any details. In terms of major pork suppliers, there are not many places Russia can turn for replacement product.”

¹Pork offal and pork fat were not among the products specifically listed in Russia’s ban, so it is still to be determined if the United States can continue to export those products.
Data sources: Global Trade Atlas and U.S. Department of Agriculture
Export totals include both muscle cuts and variety meat