Clones may cloud outlook for food exporters

By Missy Ryan - Analysis

WASHINGTON (Reuters) - Some U.S. meat and dairy producers are finding new reasons to be nervous about their export prospects after federal regulators gave backing this week to food from cloned animals.

The final ruling on Tuesday from the U.S. Food and Drug Administration, which found that food from cloned animals and their offspring poses no special health risks, capped years of debate over the technology.

Proponents say animal cloning, replicating prized livestock that can breed highly productive offspring, is a windfall for consumers. But critics say greater testing is needed and want closer examination of the technology's ethical implications.

Even as the FDA cleared the way for those goods to go to market, the Agriculture Department asked firms to hold off on selling food from clones, but not their offspring, for now.

That ban may postpone, but not eliminate, some agribusiness concerns about how the newly endorsed technology will affect efforts to convince trading partners to ease import restrictions that have kept out U.S. goods for years.

"The timing couldn't be worse ... For a million different reasons, this is going to be a sensitive issue," one industry official said, asking to remain anonymous.

USDA estimates that the United States will export 6.6 percent of its beef production in 2008 and 16.2 percent of its pork.

The FDA decision comes as the Bush administration continues to lean on several important Asian nations -- China, Japan and South Korea -- to drop beef import restrictions in place since mad cow disease was discovered in the United States in 2003.