Iowa Farmer Today
05-05-07
Beef exports making slow recovery
By Jeff DeYoung, Iowa Farmer Today
Beef exports are growing about as fast as it takes a slow boat to travel to
Southeast Asia, but three experts say the future is looking brighter.
“In 2006, our beef exports to Japan were 5 percent of what they were based on
the average from 1999 to 2003,” says Jim Mintert, Extension livestock marketing
economist at Kansas State University.
“South Korea was essentially down 100 percent. It’s moving very slowly, but we
are seeing some improvement in 2007.”
Before the announcement on Dec. 23, 2003, a cow infected with BSE (mad-cow
disease) was found in Washington state, Japan and South Korea were major
importers of U.S. beef.
Exports were immediately shut down, but since that time, most of the customers
have returned, Mintert says.
But, the focus remains on Japan and South Korea, adds John Lawrence, Iowa
State University Extension livestock marketing economist.
“We continue to grow the volume of beef exported to Japan, but it’s in fits and
starts,” he says.
“In South Korea, it appears to be more of a stand-off over the definition of
boneless. They have a zero-tolerance policy, while the U.S. wants to follow
commercial standards.”
The situation could be partially resolved later this month, when the World
Organization for Animal Health (OIE) modifies its code regarding animal health
guidelines for nations that have had cases of BSE.
“The committee is recommending that the U.S. be given minimal risk status, and
it will be voted on in May,” Lawrence says. “It would seem all parties might be
looking for a way to save face here, and this may be one way to do it.”
Political pressure is being placed on Japan and South Korea to ease restrictions
on U.S. beef. Currently, Japan will only take beef from cattle younger than 21
months of age.
“It’s a very restrictive agreement because it does not apply to much of the beef
produced in this country,” says Derrell Peel, Extension livestock marketing
economist at Oklahoma State University in Stillwater.
“I think in the long-term, they will loosen these restrictions, and make it easier to
send beef to Japan.”
Mintert says in the first two months of 2007, beef exports are up 173 percent
compared to what they were a year ago.
“Admittedly, those are still small numbers, but it is a sign of progress,” he says.
Consumer confidence is also playing a role, Mintert says.
“The public confidence in the food supply in Japan is at a very low level,” he
says. “It’s not just a political issue.”
While much of the attention has been placed on Japan and South Korea, Mintert
says there are success stories. He says one of those is Mexico, now the top
importer of U.S. beef.
U.S. beef exports in 2006 totaled 1.153 billion pounds. Of that, 668 million lbs. of
beef was exported to Mexico.
“That has been a huge success story, not only the last three years but a few
years prior to that. The growth has been phenomenal,” Mintert says.
The Mexican market is appealing because it provides a strong market for beef
grading Select or below, says Peel.
“That market adds value to those products,” he says.
Canada is now the No. 2 market for U.S. beef, but Peel says that is pretty much
by default.
“Most of the people in Canada are in the eastern half, and most of the cattle are
in the western half, and it just seems easier to move cattle north and south than it
does east and west.”
Mintert adds exports have grown to the Caribbean Islands and other areas.
“The growth into Japan and South Korea is very important, but they are not the
only export markets,” he says. “We’ve done a pretty good job of growing in other
markets.”
“Mentally, we have proven to ourselves that we can do well without having
specific markets,” Peel adds. “Markets like Mexico are going to be very
important. We realize there can be life after Japan.”
He says the U.S. beef industry also has learned a valuable lesson when it comes
to handling a disease announcement.
“There was a tremendous amount of pressure to get those markets open, so
Japan and South Korea are essentially beating us with the stick we gave them,”
Peel says.
“We were in such a hurry to reach those agreements, when more patience might
have resulted in less restrictions.”
He adds the export industry is strong enough now that it could withstand another
BSE announcement.
“I think we have it pretty well under control,” he says. “It may hurt a little bit with
some transitioning markets, but I don’t think it would have a large impact.”
The beef market is seeing strength on the domestic front as well, with fed cattle
prices reaching $100 per hundredweight for a brief period last month. Lawrence
says tight cattle supplies and strong consumer demand is fueling the price surge.