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By Mike Barnett
Editor
Good news on the beef front: reopening trade with the former number one importer of U.S. beef and beef products may soon be back on track.
Beef exports to Japan have been closed since the discovery of a single case of BSE (bovine spongiform encephalopathy) in a dairy cow in Washington state last December. On Oct. 23, U.S. and Japanese officials reached a framework agreement that will permit the resumption of beef trade between the two countries. The agreement was reached after three days of prolonged negotiations to determine the conditions under which trade will be resumed.
"This is huge news, the announcement that progress has been made," Dan Dierschke, president of the Texas Beef Council and a Texas Farm Bureau state director, said in an interview with the Texas Farm Bureau Radio Network. "We have suffered for 10 months under not being able to export to our primary markets, which is mainly Japan, and also, South Korea. How soon something is going to take place as a result of this announcement is a little difficult to determine, because certain processes have to be completed."
According to a USDA news release, a special marketing program will be developed for Japan under which USDA's Agricultural Marketing Service will certify that exported products meet the terms of the agreement. The United States now will be permitted to sell beef and variety meats to Japanese importers from animals below 21 months of age. Animal age will be determined by a combination of production records and physiological means (grading system). This marketing program will be evaluated by the countries in July 2005 and modified as appropriate. The evaluation will be based in part on an independent review of the marketing program and the BSE situation conducted by experts from the World Organization for Animal Health (OIE) and other organizations.
Japan was the largest market for U.S. beef and products with sales in 2003 before the ban was imposed exceeding $1.7 billion. Exports in total account for well over 10 percent of the total U.S. beef output.
"Generally, the export market is valued at about $15 per hundredweight for cattle coming out of the feedlot," Dierschke said. "Part of that export market has been resumed, specifically with Mexico and some of the smaller nations around the world. At the current time, I would say we're probably losing $10 per hundredweight, and I anticipate after a period of time—perhaps a year—much of that will be returned to us. So the net effect is somewhere between $150 and $200 per head coming out of the feedlot. And naturally, a good part of that will translate down to the cow/calf producer."
Although uncertain on the timing of the resumption of beef trade between the two countries, Dierschke said the industry has maintained its presence in Japan and Korea.
"We have continued to advertise within the Japanese and Korean markets so that once trade barriers are down, we anticipate rapid movement of product to Japan. And when I say Japan, I anticipate Korea will follow shortly thereafter. Full resumption (of beef trade), no one wants to make a prediction of that. It will probably be a year or two before we have equivalent imports of products into Japan."
Gregg Doud, chief economist with the National Cattlemen's Beef Association agreed: "Cattlemen must remember, however, that the news doesn't mean the United States will instantly regain the same market share in Japan that we had in December 22, 2003. We have a lot of work to do to regain our position as the leader in this market."
Meanwhile, on Oct. 26, Taiwan agreed in principle to resume imports of U.S. beef and beef products. In 2003, Taiwan's purchases of beef and beef products totaled some $325 million.
According to Jan Lyons, president of the National Cattlemen's Beef Association, Taiwan has been one of the fastest growing markets for U.S. beef in recent years.
"Trade of U.S. beef and beef products to Taiwan doubled between 1998 and 2000," Lyons said. "In 2003, the U.S. exported a record $76.3 million in beef and beef variety meats to Taiwan, with total beef product trade to Taiwan in 2003 amounting to $325 million.
Taiwan officials indicated the required assessments and evaluations for trade to resume were nearing completion. The final step is an on-site inspection of the major features and implementation of the U.S. BSE measures. A delegation of Taiwan experts will travel to the United States for these visits beginning Nov. 10.
