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Wrongly Named "Swine Flu" Casts A Pall On Trade

Perception always carries more weight than reality. The latest example is the near-pandemic Influenza A (H1N1) that began in Mexico

Perception always carries more weight than reality.

The latest example is the near-pandemic Influenza A (H1N1) that began in Mexico and turned daily activities in the U.S. topsy-turvy last week. Originally and wrongly dubbed the “swine flu,” consumer reaction to all things pork was immediate and merciless.

“The incorrect reporting of the H1N1 flu, or Influenza A, as swine flu has compounded the economic squeeze the U.S. pork industry has experienced the past 19 months, when producers lost an average of $20/hog,” say officials with the National Pork Producers Council. “Since the flu outbreak became a major news story, producers have lost another $6/pig, with average hog prices falling from $124/head on April 24 to $118 on April 28. That decline cost the industry nearly $2.5 million/day.”

According to the Center for Disease Control and Prevention (CDC), “This virus was originally referred to as swine flu because laboratory testing showed that many of the genes in this new virus were very similar to influenza viruses that normally occur in pigs in North America. But further study has shown that this new virus is very different from what normally circulates in North American pigs. It has two genes from flu viruses that normally circulate in pigs in Europe and Asia and avian genes and human genes.”

As of last week, World Health Organization (OIE) officials said the virus hadn’t been insolated in animals. As such there is no indication of the virus being transmitted between animals and humans; all transmission has been human to human. OIE also points out there’s no evidence the virus is transmitted via food. Since then, reports surfaced that a worker infected with Influenza A has transmitted the disease to at least one hog at a Canadian facility.

As of Saturday, 160 Influenza A cases had been confirmed in the U.S., according to CDC; one fatality.

“I want to reiterate that U.S. pork is safe,” said Tom Vilsack, USDA Secretary. “While we in the U.S. are continuing to monitor for new cases of H1N1 flu, the American food supply is safe. There’s no evidence or reports that U.S. swine have been infected with this virus… This isn’t an animal health or food safety issue. This discovery of the H1N1 flu virus is in humans. Any trade restrictions would be inconsistent with OIE guidelines.”

Despite fact and science, several key U.S. trade partners curtailed pork shipments from the U.S. last week, either wholly or they banned pork originating in specific states.

According to Chris Hurt, Purdue University ag economist, it could take weeks or longer for U.S. pork producers to recover from export restrictions tied to a worldwide influenza outbreak.

“This couldn't get much worse for the pork industry,” Hurt said Wednesday. “You've got other countries starting to follow the lead of Russia and China by limiting their import of our pork. Then there are the consumers worldwide who are linking the word 'swine' to pork, even though this influenza strain did not come from swine. And then there's the world economy in general.”

It’s possible that confusion over pork’s role in the virus could drive some consumers to beef. But, Derrell Peel, Oklahoma State University livestock marketing specialist, points out, “Much more probable is the likelihood that all meats will be impacted negatively by reduced travel and economic impacts in global markets.

“There is a distinct possibility that the flu situation may further weaken the U.S. economy and/or delay recovery. Mexico is a major market for both pork and beef from the U.S. and the virtual shutdown in Mexico is likely to significantly aggravate the already floundering Mexican economy. Some countries have used the situation to impose bans on U.S. pork and, in some cases, other meats as well. Even without direct impacts like trade bans, the macroeconomic impact in many other countries could be significant.”

Beef and cattle markets softened in the wake – boxed beef cutout values declined $3.50/cwt. during the week, while live fed cattle sales declined $2-$6/cwt. regionally, compared to the previous week’s market (see “Negative News Weighs Down Cash And Futures”).

“At this point there is no way to anticipate just how bad the flu situation will get and the economic impact on beef markets is even more uncertain,” Peel says.