Jim Herlihy - Foreign Animal Disease Occurrence Global Perspective

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A Global Perspective on Market Reactions to and Mitigation of Foreign Animal Disease Occurrence - Jim Herlihy, U.S. Meat Export Federation, from the 2012 Annual Conference of the National Institute for Animal Agriculture, March 26 - 29, Denver, CO, USA.

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  • Opening slide
  • Good afternoon. I’m Jim Herlihy. I manage communications for the U.S. Meat Export Federation.
    We’ve heard some excellent information today from people who will play key roles in the event of a foreign animal disease outbreak. My role today is somewhat different. My focus is on the international marketplace.
    Before I start, I want to offer a disclaimer. I am not a foreign animal disease expert. There are many here in the room who rightly deserve that title. What I am here to do today is offer the perspective of an organization that deals in the international marketplace and, from a communications perspective, relate some of the experiences I have seen both through USMEF and in my former role as head of communications for Swift & Company.
    With that said, let me give you a point of reference: 2011 was a record year for red meat exports. The U.S. established new volume and value records for beef, lamb and pork exports. We sold more than 3 ½ million metric tons – or close to 8 billion pounds – of beef, lamb and pork valued at about $11 ½ billion to our international trading partners.
    Another way to look at those numbers is to consider that they represented 14% of total U.S. beef production and nearly 28% of pork, and the value of those exports per head amounted to $55.55 for pork and $206.37 for beef. In the event of a disease outbreak, it is a virtual certainty that the export door will slam shut, at least for a time period.
  • 7 One of the primary challenges in a foreign animal disease outbreak is effective and timely communication. It won’t solve all of the problems that are inherent in this kind of situation, but it can go a long way toward eliminating contradictory information and the resulting confusion.
    For the sake of simplicity, let’s assume that foot-and-mouth disease is the challenge we’re dealing with.
    I’ve participated in FMD tabletop exercises and a number of discussions among my peer communications professionals at NCBA, National Pork Board, Dairy Management and others. I can tell you that these organizations are primed and ready. PR agencies have been retained. Dark websites are set up. Talking points are written. Conference calls will be held. Spokespersons are standing by to help minimize the impact of an FMD outbreak in the U.S. Everyone wants to demonstrate that they are returning value to their members by being the definitive source of information.
    Of course, there will be different messages out there. On the meat side, we will be working to understand and then effectively recommunicate the safety and status of meat products. There will be some competing messages from our friends in the dairy industry, who will want to communicate the benefits of pasteurization – the “kill stop” it provides that makes milk and other dairy products safe. Since an FMD recall would involve multiple species and different types of food products, there will be some communications challenges.
    I was managing communications for Swift & Company in 2003 when BSE was discovered in the U.S., and our industry looked to APHIS for clear communication and timely updates, which we then shared through our network. We’ll certainly look for that again in this instance.
    From the USMEF perspective, we’ll be looking to share this clear communication with our exporting members as well as our international trading partners. Fortunately, many of the key markets we deal with are intimately familiar with FMD and other foreign animal diseases. Two of our top beef and pork markets, Japan and South Korea, have recently had FMD outbreaks, and China is continually battling the disease. More on that in a moment.
  • This is a snapshot of USMEF’s global footprint. It gives you a glimpse of where we have staff on the ground. You’ll see many of the same makrets represented on the following maps.
  • This slide shows the OIE’s map of FMD reports thus far in 2012. As you can see, Russia, China, South Korea and Vietnam are among the key U.S. export markets that have had their domestic livestock industries affected by FMD. The outbreak in South Korea was particularly serious, with about one-third of the domestic hog herd – or well over 3 million head – having to be disposed of because of the disease.
    And when you look at some markets – like Mongolia and Zimbabwe, which are totally surrounded by confirmed FMD cases – it’s hard not to believe that there are unreported FMD cases out there.
    In these countries, the message that FMD is an animal disease – not a human disease – has been thoroughly communicated. However, in most cases these countries are well-versed in the risks of FMD, and will be quick to close their borders to U.S. product. We’ll talk more about that in a bit.
  • Similarly, this is the OIE map for current African Swine Fever outbreaks. Russia has had a particularly tough time controlling the disease. While it doesn’t show up well on this map, FMD also is found in the port of Kaliningrad, which is further west and deeper into Europe, spreading the risk for producers in the EU.
  • There certainly is a multitude of challenges to consider in a foreign animal disease outbreak. One that USMEF must help manage is the disposition of product in transit.
    How much is out there and can it be delivered?
    If it can’t, where does it go?
    If it must come back to the U.S., is it safe to consume, or must it be destroyed? If so, how?
    At any moment, there are typically more than 5,300 containers in transit in ocean-going vessels, and more than 1,000 on land. Those on land can be captured much more readily and managed. Decisions will need to be made about the others as to whether they can be delivered – or if part of the load can be delivered based on the cutoff date established for production. As you can see, we’re talking about more than 250 million pounds of product in transit at any one time.
    Given the logistical challenges of redirecting loads (considering age and product limitations, the EU’s ban on hormones and carcass treatments, etc.), it may be impractical to direct any rejected loads anywhere but back to the United States.
  • As I move into the next few slides, I’ll mention that USMEF contacted our staff in the various markets to get their insights on what we could expect in the event of an FMD outbreak. These insights are based on their contacts with government officials, importers and industry leaders. These are not official government statements.
    The ASEAN countries frequently will review the situation and exchange notes to see which country is lifting the ban first and the rest might follow. It is anticipated that imports would be suspended immediately. Vietnam might be the exception. There has been an outbreak of FMD in Vietnam since November 2010. More than 150,000 cattle in 39 provinces have been infected.
    Singapore will recognize regionalization. Other countries are unclear at this time.
  • In China, our staff there sees the possibility of a temporary national market closure until the U.S. is able to provide information on the extent of the outbreak. China applies regionalized access (by state) to U.S. poultry exports as related to AI outbreaks.
    New FMD Outbreak in China: Dr Zhang Zhongqui, Director General from the China Animal Disease Control Centre at the Ministry of Agriculture's Veterinary Bureau in Beijing has reported an outbreak of foot and mouth disease in Ningxia.The World Organisation for Animal Health (OIE) received an immediate notification yesterday, 22 February. The disease was first observed on 19 February and confirmed on 21 February. The affected population consists of cattle. Out of 22 susceptible animals, four cases were identified. All susceptible animals were destroyed.
  • Expect EU to close to imports of products produced within the areas in the process of containment and eradication.
    The EU is open to imports of boneless beef from South America, recognizing the different statuses of regions FMD-free with or without vaccination.
    The problem for the U.S. would be that there currently is no regionalization plan prepared.
  • The HK government does not have a definite policy on meat imports from FMD-affected countries. With periodic outbreaks of FMD in South America and China in recent years, we are not aware that the HK government has taken action on them. China, HK’s major pork supplier, does have FMD, which has made HK very prudent in banning pork from FMD-affected countries. Hong Kong itself is not FMD-free, although it’s not a livestock-producing country. That status may be from zoo animals or other sources.
    There is some precedent for maintaining imports based on a record of imports from FMD-positive countries in South America and China.
    If neighboring countries take trade-suspending actions, the HK government could face pressure to take “precautionary measures.”
  • Imports would be banned immediately once the FMD outbreak is confirmed. Resumption of access would follow OIE guidelines.
    Although the government has not publicly addressed regionalization, authorities are beginning to address the concept on a case-by-case basis, such as in the case of low pathogenic avian flu in the U.S.
    Given the focus of Japanese consumers on food safety and wholesomeness, the image of FMD contamination could slow the recovery of U.S. pork imports.
  • Market closure would be immediate. The chief veterinary officers of Mexico, Canada and U.S. would work together to assess the situation and execute the Tripartite Plan designed for this situation.
    Regionalization would likely not be adopted in this situation due to the spreadability of FMD and the fact that the U.S. does not accept regionalization with regard to this animal disease.
  • The response from the United Arab Emirates (one of the leading Gulf Cooperation Council countries in regulating food safety and standardization procedures) would likely vary depending on the level of the epidemic in the U.S. and OIE reports.
    As an example, when swine fever was found in Egypt, the UAE banned all meat imports from Eqypt for about three months. The ban was lifted and imports resumed immediately after OIE reports indicated that Eqypt was free of the disease.
    Speaking of EGYPT, it was reported by the FAO recently that that country is calling for urgent action to control a major outbreak of foot-and-mouth disease and prevent its spread throughout North Africa and the Middle East, which could have serious implications for food security in the region. With vaccines urgently needed, international and regional organizations are at the ready to assist in developing a regional prevention, preparedness and action plan. In Egypt 40,222 cases of the disease are suspected, according to official estimates, and 4,658 animals, mostly calves, have already died.
  • Russia’s veterinary requirement states that imported meat must come from regions free from FMD for the last 12 months for the territory of the country.
    While Russia does not specify whether it will accept regionalization or not, during the recent FMD outbreak in Paraguay, that country was barred from exporting to Russia at the end of September, but one month later reopened except for one province.
    UPDATE: RUSSIA - Dr Nicolay Vlasov, Chief Veterinary Officer at Russia's Ministry of Agriculture and Food, has reported an outbreak of foot and mouth disease in Primorskiy Kray. The World Organisation for Animal Health (OIE) received up Follow-up Report No. 1 yesterday, 15 March. The affected population consists of cattle. A total of 369 cattle were found susceptible to the outbreak. Out of these, 82 cases were reported. No deaths were reported, and no animals were destroyed. Foot and mouth disease virus was found on a private farm in the village of Pospelovka. Sick animals in the village have been isolated. Measures are being taken to prevent the spread of the disease. The village of Pospelovka is located 30 km from the border with China. Four kilometers away from the village, a highway of federal importance runs. Oktyabrsky raion is part of the “buffer zone”, therefore all animals are vaccinated annually twice a year against foot and mouth disease. The results of nucleotide sequencing followed by a phylogenetic analysis (15/03/2012) showed that the FMD isolate from Pospelovka belongs to O PanAsia genetic lineage.
  • A complete ban will be enacted if FMD is found.
    Korea does not recognize regionalization.
  • Immediate suspension of imports from the U.S
    UPDATE: TAIWAN - The Taiwanese veterinary authorities have reported finding more pigs affected by foot and mouth disease during routine surveillance.The World Organisation for Animal Health (OIE) received Follow-up Report No. 2 on Friday, 16 March. The outbreak occurred at a farm in P'ing-Tung. Out of a total of 1010 susceptible animals, 9 cases were reported. No deaths were recorded, and no pigs were destroyed.
    .
  • Now let’s look at the potential economic impact of FMD on the United States. A study by the Center for Agricultural and Rural Development Food and Agricultural Policy Research Institute projects that the introduction of FMD in the United States would create revenue losses to the beef and pork industries averaging $12.9 billion per year.
    There would be additional impact on rural America with an estimated loss of 58,000 jobs. Not factored into that $12.9 billion number are related losses – expected to be significant – to the corn and soybean industries.
  • Let me stop there so I can answer any questions you may have.
  • Jim Herlihy - Foreign Animal Disease Occurrence Global Perspective

    1. 1. A Global Perspective on Market Reactions to & Mitigation of Foreign Animal Disease Occurrence Jim Herlihy VP of Communication U.S. Meat Export Federation
    2. 2. The Challenge: Effective Communication • Coordinate messaging through APHIS – Different ag groups may have different messages (meat vs. dairy) • Help exporters/importers manage product • Provide reassurance to international trading partners
    3. 3. USMEF’s Global Footprint
    4. 4. 2012 FMD Outbreaks
    5. 5. 2012 African Swine Fever
    6. 6. The Issues • Determining the production cutoff date • Identifying product in transit – Roughly 3 weeks of production in pipeline – 5,364 containers by sea, and 1,092 on land • About 258 million pounds of beef, pork, lamb • Clarifying product status – Return to U.S. – safe for consumption – Return to U.S. for disposal – Option to move to another market? • Disposal options
    7. 7. What Can We Expect – ASEAN? • Immediate import suspension – Vietnam might not • Regular FMD setbacks
    8. 8. What Can We Expect – China? • Expect at least temporary market closure – (see AI outbreaks, H1N1)
    9. 9. What Can We Expect – EU? • Open to regionalization – U.S. doesn’t have regionalization plan
    10. 10. What Can We Expect – Hong Kong? • Not FMD-free – China is main pork supplier (with FMD) • Also imports from South America – Regional pressure
    11. 11. What Can We Expect – Japan? • Immediate ban • Follow OIE guidelines • Expect slow resumption
    12. 12. What Can We Expect – Mexico? • Immediate ban • Regionalization unlikely • Follow U.S. model
    13. 13. What Can We Expect – Middle East? • Response likely in line with level of epidemic and OIE reports • New FMD outbreak in Egypt
    14. 14. What Can We Expect – Russia? • Immediate ban, future uncertain – Paraguay barred from exporting, reopened to regionalization one month later • New outbreak near China border
    15. 15. What Can We Expect – South Korea? • Immediate ban – no regionalization
    16. 16. What Can We Expect – Taiwan? • Immediate ban • New outbreak in Taiwan March 16
    17. 17. U.S. 2011 Beef/Pork Exports • Pork – 2.25 million metric tons (4.97 billion pounds) – Valued at $6.1 billion – 27.5% of total pork production – $55.55 per head export value • Beef – 1.29 million metric tons (2.84 billion pounds) – Valued at $5.42 billion – 14% of total beef production – $206.37 per head export value
    18. 18. FAD Impacts: BSE • More than $12 billion in lost sales and opportunities since 2003 • Continued access restrictions – Japan (20-month cattle age) – China (no access) – Mexico, Taiwan, South Korea… (age and product limitations)
    19. 19. FAD Impacts: FMD • More than $12.9 billion in lost sales and opportunities per year • Estimate of 58,000 lost full-time jobs • Additional losses to corn and soybean industries – Estimate of 570 million bushels of corn and 95 million bushels of soybeans exported through U.S. red meat in 2011
    20. 20. Questions?

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