Some skeptical on U.S. beef export deal with China

2006 deal fell through | China is the world’s biggest beef importer but the U.S. has been shut out since the BSE crisis in 2003

NASHVILLE, Tenn. — China could import beef from the United States by summer, but analysts warn nothing is certain until the first container ship sets sail. 


“We had some commitment that they will allow beef in China before the middle of the year,” said Al Almanza, administrator of the U.S. Food Safety inspection Service’s meat, poultry and processed egg programs. 


Almanza has visited China four times in the last 16 months to negotiate approvals for U.S. plants. 


China said it would accept beef in 2006, but nothing happened because authorities questioned the U.S.’s ability to produce safe beef and control BSE. 


“I believe we are finally making some headway in explaining the different programs,” he told a government affairs committee meeting held during the National Cattlemen’s Beef Association convention in Nashville Feb. 4-7.


Canada was approved in 2011, and eight beef plants are certified to export to China. It exported 10,088 tonnes of beef worth $35 million in the first half of last year. 


Shipping beef to China could be a big deal for the U.S. 


“China is the biggest beef importer on the planet, and it happened very quickly,” said market analyst Brett Stuart of Cattlefax. 


The average Chinese eats 12 pounds of beef per year, but the country has a population of 1.3 billion and the wealthier middle class is expected to swell from 300 million to 600 million by 2020. 


The U.S. ships beef to Hong Kong, which may become the third largest destination for American beef this year. Considerable beef is diverted from Hong Kong to the mainland.


China imported 102,000 tonnes of beef last year, and prices are rising because it is in short supply around the world. 


This encourages other large producing nations to target China, where the retail beef price has increased to $4.98 per pound this year from $2 per lb. last year.


“That rapid price inflation is pulling beef from Australia and India, wherever they can find it,” Stuart said at an NCBA session. 


China will also import products that are not popular in North America, such as tripe from the abomasum, pig brains, intestines and tongue.


The Chinese are concerned about social stability and food security. Domestic prices are kept artificially high to encourage farmers to stay on the land, but agricultural resources are limited. The government may have to move away from a policy of self-sufficiency and decide which food to produce at home and which products to import.


“China is clinging by its fingernails to that 100 percent self sufficiency,” Stuart said.


“They are going to have to adjust.”


India is a newcomer to the beef exporting business, shipping meat derived from water buffalo. It has exported 1.5 million tonnes to the Middle East, Africa and southern Asia since 2009. 


India has the world’s highest density of cattle with 300 million head. About 100 million head are water buffalo and the rest are Brahman cattle, considered sacred among Hindus.


The beef business is controversial in India. 


There are about 300 million Muslims in India who do not eat much beef but see the advantage in processing water buffalo, which have carcass weights of 250 to 300 lb.


“Exports are very lucrative, and it is a very affordable product,” he said. 


However, foot-and-mouth disease limits further Indian access to key markets served by the U.S. Mandatory vaccination is underway, but the potential to rid India of the disease is slim. 


Brazil is the world’s top exporter, offering a mostly grass fed product. 


“Brazil can make a lot of money selling grass fed beef into the developing world,” Stuart said. 


Brazil is feeding some cattle because it has a large enough land base and grain supply, but is challenge is foot-and-mouth disease. There is potential to feed more cattle if the country can clean it up, but it may take five to 10 years to achieve disease free status.


However, a growing challenge for all exporters is a flat supply of beef with little herd growth. The world’s beef producers produce 54 million tonnes a year, and another four million tonnes could relieve the stress. 


“On a global basis, we continue to see stagnant production in the global beef sector,” Stuart said. 


The U.S. cattle herd has been steadily declining since the 1970s, although improved prices appears to be encouraging a small increase. The country may not be able to export much more until 2016. 


Nevertheless 2013 was the second consecutive year to break beef export records. 


The U.S. Meat Export Federation reported $6.157 billion in sales, a 12 percent increase over 2012 and volume of 1.17 million tonnes, which is a three percent increase in volume. It means $244 earned on every fed animal comes from export sales.

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