090108 Mexico Partially Lifts Meat Ban

January 5, 2009

Springdale, AR -- Almost as quickly and randomly as Mexico banned 30 U.S meat plants from exporting beef, pork and poultry last Friday, 20 of the plants got word Tuesday from the U.S. Department of Agriculture that the suspensions were being lifted.

All but one of the banned plants owned by Springdale-based Tyson Foods Inc. were reinstated, according to the USDA's Web site.

The USDA said that Mexico suspended the 30 plants due to sanitary issues such as packaging, labeling and transport conditions.

The news of Mexico's displeasure could have been problematic had the issue not been resolved quickly, said Farha Aslam, analyst with Stephens Inc.

Mexico is the largest purchaser of U.S. beef products, accounting for roughly 40 percent of U.S. exports, according to Aslam.

Beef and pork producers like Tyson Foods and Smithfield Foods rely heavily on trade with Mexico. The country is the third-largest buyer of U.S. pork, accounting for about 18 percent of the U.S. pork export volume.

Tyson Foods operates a number of processing facilities and said the company would be able to fill its orders with plants not affected by Mexico's ban. Smaller processors banned do not have that luxury.

Consequently, U.S. cattle and hog prices fell sharply on Friday after the plant suspensions were reported. Prices rebounded Tuesday following the reinstatements, Aslam said.

While the government says the bans were prompted by sanitation issues, livestock and meat analysts blamed it on Mexico's opposition to a U.S. meat labeling law that took effect Oct. 1. The County of Origin Label requires processors to label fresh meat products so consumers know where the meat comes from.

Both Canada and Mexico have been opposed, believing the label law will hurt U.S. demand for non-U.S. meat and livestock, analysts said.

Suspensions in imports from 10 plants still remained in place Tuesday, according to the USDA. Among them are Tyson Foods' plant in Columbus Junction, Iowa, and Cargill's plant in Ottumwa, Iowa.