JBS USA to produce pork without growth drug banned by China, seeking more exports

CHICAGO (Reuters) - JBS USA will remove a growth drug banned by Beijing from its U.S. hog supply, the company said on Friday, accelerating the competition for pork exports as China grapples with a devastating pig disease.

The meat packer's move away from the drug ractopamine, a feed additive, shows how companies are manoeuvring to take advantage of an expected shortage in China, the world's largest pork consumer, due to African swine fever (ASF).

Though not harmful to humans, the disease is deadly to pigs, with no vaccine available. It surfaced for the first time in Asia more than a year ago in China, and has now spread to over 50 countries, according to the World Organisation of Animal Health - including those that account for 75% of global pork production.

"Here's a major packer that says ASF is important enough that we're going to get in a position to serve that market," said Steve Meyer, economist for U.S. commodity firm Kerns and Associates.

JBS USA, owned by Brazil's JBS SA, said it removed ractopamine from internally owned production systems in August 2018. Now the company will also prohibit the drug from diets of hogs owned by farmers who sell livestock to JBS USA.

The Colorado-based JBS unit sells pork under brands including Swift and Swift Premium.

"Early on, basically JBS said, 'You guys chase that export stuff. We're going to serve the domestic market,'" Meyer said. "It's pretty much an about face on that."

Rival U.S. pork producer Smithfield Foods, which is owned by China's WH Group, already raises all of the hogs on its company-owned and contract farms without the drug.

Tyson Foods Inc previously told Reuters it was looking at diversifying its pork supply to include ractopamine-free hogs as demand expands.

"We are confident this decision will provide long-term benefits to our producer partners and our industry by ensuring U.S. pork products are able to compete fairly in the international marketplace," JBS USA said in an emailed statement.

Ractopamine is used in some countries to raise leaner pigs, but China does not allow its use or tolerate residues in imported meat. The European Union also bans ractopamine.

Elanco Animal Health, the manufacturer of Paylean, its brand name for a ractopamine feed ingredient, did not immediately respond to a request for comment.

Beijing blocked pork imports from a Canadian company this summer because China's customs agency said a shipment contained ractopamine.

(Reporting by Tom Polansek; Editing by Chizu Nomiyama and Bill Berkrot)

By Tom Polansek