020437 Pork, Beef Prices Dropping

Des Moines, IA - The aftershock of Russia's embargo on U.S. poultry exports has caused pork and beef prices to fall, experts say.

The embargo prompted stores to offer bargain prices on chicken and turkey to sell the unexported supply.

That means consumers opted to take advantage of the lower prices and buy poultry over beef and pork, resulting in excess supply for those products, Iowa State University economist Mike Duffy said Wednesday.

Russia indefinitely lifted the monthlong ban on Monday, but meat prices have remained low. Pork prices have fallen to nearly 28 cents a pound for live hogs, or around $32 per hog, although prices were climbing toward 40 cents per pound earlier this year.

Beef prices also sank. Cattle are being traded at nearly $65 a head, compared to around $75 a head more than a month ago.

The embargo has exposed a vulnerability in the U.S. food industry, Duffy said.

"You get one action clear across the world in Russia, and it backs us up and affects us over here clear in Iowa," he said. "That's, in my opinion, part of the issues that we face when we rely so heavily on exports, when we rely on things that are way outside of our control."

Though U.S. Embassy officials in Moscow said they don't know why Russia embargoed U.S. poultry, midwestern economists suspect Russia was retaliating against U.S. tariffs on steel imports.

"Basically, I think Russia did the poultry thing and denied, of course, that was the motivation," said Ron Plain, a University of Missouri economist. "Legally you can't do this with that motivation, and if they said that's why they did it, they would have been violating the rules."

The Bush administration last month announced steel tariffs of up to 30 percent. The EU and Japan have filed a complaint about the tariffs with the World Trade Organization, arguing it was an unfair move.

Plain said he believes the United States will be found in violation of its trade agreements and other exported food products may suffer as countries react to the tariffs.

"The farmers will end up paying a good sort of portion of the price for the government's attempt to help out the steel industry," he said.

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