|By SARAH B. AUBREY
WASHINGTON, D.C. — USDA Secretary Mike Johanns announced last week that Japan and the United States are likely in the final steps toward resuming beef trade.
Japan has been without U.S. beef since it denied shipments following a Bovine Spongiform Encepalapathy (BSE) discovery in December 2003.
Japanese technical audit teams were set to arrive in the United States last weekend to conduct several packing plant inspections. These inspections will conclude by July 21, said a USDA report. Japan has indicated that following the completion of its audits, it will resume imports of U.S. beef rapidly.
Experts expect shipments could start moving to Japan as early as August.
Johanns said the United States has “instituted numerous changes to the system, answered every question posed by Japan, and delivered an abundance of factual, science-based assurances that U.S. beef is safe.”
South Korea has also sent inspection teams to the United States to review packing plants and beef safety. South Korea has not made an announcement about resuming trade, but it is generally expected in July, too, noted Mike Miller, research director for Cattle Fax, a Denver, Colo.-based independent beef industry non-profit group.
According to the National Cattleman’s Beef Assoc., in 2003, South Korea was the third-largest beef importer; led by No. 2 Mexico and Japan. Due to the Asian nations’ ban on U.S. beef, Mexico is now the leader.
China is often considered as a large potential market for U.S. beef, due to its burgeoning population and developing nation status, but Miller is only cautiously optimistic about China, especially short term.
“Resort and high-end restaurant trade potential is there, but our beef is just too high priced for the mass market right now,” Miller said. “It’s not an easy sale in China. We need to spend more time in that market.”
“In most cases it was an immediate pull out due to the BSE case, but most all have come back, Asia stands out since they have not,” said NCBA official Joe Schuele. “The sticking point with Asia seems to be that they want to ensure that inspection standards are enforced. Still, our position is that we can’t have foreign governments regulating our industry. They can have input, but can’t decide plant-by-plant if the locations will work for them.”
In 2005, the U.S. beef exports totaled 688 million pounds, according to the May-June 2006 issue of Insights into the Beef Industry, a Cattle Fax publication.
This year, the beef industry is on track to export about 900 million pounds, largely due to Mexico’s purchases of items such as bone-in cuts and variety meats. Other countries, such as Egypt, are driving exports of niche products that don’t sell well in the United States, such as beef liver. NCBA hopes to continue to develop Central American trade due to recent tariff relief.
Despite these new trade opportunities, there has still been a marked loss of beef exports since 2003.
“We’re up over 30 percent from last year, but even if we hit the 900 million number, we’re about 1.5 billion short of our high in 2003,” Schuele said. “Without those Asian markets its not possible to get to the previous figures.
Miller agreed. “We’ve lost a lot of value in specific products since 2003,” he said. “Certain items such as short ribs, chuck roll, and short plate are big products in Japan and tongue also sells there and has little or no value here.”
Despite a significant decline in exports, the beef industry has not felt a major financial hit.
“We’ve been in a period of tighter supplies and stronger consumer demand for beef, so producers may not have felt the loss of profitability yet, especially at the cow-calf producer level,” Schuele said.
Schuele is concerned this cycle may shift as domestic supplies have had several years to ramp up allowing a higher beef supply in the marketplace.
“Basically, our figures show that already the producer is missing roughly $120 per animal without the exports to Asia,” said Schuele.
He added that combing that with increased supply at home could drive the beef prices down in the next year.
“Right now foreign markets are really taking on a greater sense of urgency as our domestic supplies pick up,” Schuele explained.
Even with Japan’s announcement and South Korea’s expected trade resumption, NCBA cautions producers against being too optimistic about the beef market short term.
“Even with these countries coming back, it will take a while to build those markets back up. Australia and New Zealand and our pork have all captured some of that market share,” Schuele said.
“It’s been nearly three years (since the 2003 BSE case was found) and these Asian countries have adjusted without us,” said Miller.
“It will be an uphill battle to regain these markets we’ve lost.”
Miller believes South Korea’s business may be easier to regain than in Japan.
“If 18 months from now we’re sending about half of the previous 2003’s levels this would be a big deal; we’ve got a lot of public relations work to do.”
This farm news was published in the June 28, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.