Paraguay detects foot-and-mouth, halts beef exports

By Daniela Desantis

ASUNCION (Reuters) - Paraguay halted beef exports until December and ordered the slaughter of hundreds of cattle on Monday after officials detected an outbreak of foot-and-mouth disease in the beef-exporting nation.

The outbreak is a tough blow for the fast-growing beef industry in the South American country, a top 10 global exporter that had been expected to post record exports this year due to solid demand from key markets Russia and Chile.

"The suspension (of exports) is for prudence, with the aim of guaranteeing the quality of the meat shipped abroad, until we determine if the outbreak is isolated or is in other areas too," Carlos Simon, interim director of the national veterinary service Senacsa, told online paper Ultima Hora.

Shipments will be halted until December, a measure industry figures said could cause losses of up to $400 million and help fellow South American beef exporters steal market share.

"During the rest of the year, we're going to lose out on three months -- exports will be zero," Luis Pettengil, head of the Paraguayan Beef Chamber, told reporters. "We're looking at (a loss of) about $300 million or $400 million."

Officials ordered some 800 head of cattle be slaughtered to prevent the spread of the highly contagious disease and declared a sanitary emergency in the area where the infected animals were found.

Foot-and-mouth is one of the world's most serious infectious diseases of farmed animals and is regarded as a major economic threat in Europe.

While not harmful to humans, it causes lesions and crippling in cattle and sheep and can be passed on from infected cattle brought into a country and from wild animals such as deer -- making it potentially difficult to contain.

The outbreak -- Paraguay's first in almost a decade -- was detected in the department of San Pedro, some 185 miles from the border with Brazil, the world's top beef exporter.

INTENSIFYING CONTROLS

Brazil, which is currently classified as foot-and-mouth free with vaccination -- apart from Santa Catarina state, which is free without vaccination, last had an outbreak of the disease in 2005 and has since stepped up vaccination programs.

The southern-most Brazilian border states are under vaccination, limiting the risk of outbreaks.

That outbreak prompted top buyer Russia to halt beef imports from eight Brazilian states for two years, causing meatpackers multimillion dollar losses.

In neighboring Argentina, another important global beef exporter also classified as free of the disease with vaccination, animal health officials said they were intensifying controls at border posts with Paraguay.

"The measure ... aims to protect the health of the national herd," the state-run Senasa agency said in a statement on its website.

Beef is Paraguay's No. 2 export after soy and the livestock industry accounts for about 10 percent of the country's gross domestic product, central bank data shows. There are some 12 million head of cattle in the country.

Paraguay has doubled beef exports in the past six years and in 2010 the country shipped around 170,000 tons of the meat. The outbreak will likely hurt beef exports in the medium term, analysts said.

"This is very serious for Paraguay because we'll get shut out of some markets and potential losses could be $900 million a year," said Olga Ferreiro, an analyst with Investor Economia, in Asuncion.

"All the other exporting countries like Uruguay, Brazil and Argentina are going to try to cover our share of the market and winning that back could take several years," she added.

The last foot-and-mouth outbreak in Paraguay occurred in 2002, and the country was declared free of the disease with vaccination in 2005.

(Additional reporting by Nicolas Misculin in Buenos Aires and Reese Ewing in Sao Paulo; Writing by Simon Gardner and Helen Popper; Editing by Marguerita Choy)