McDonald’s, the world’s largest hamburger chain, is testing Australian
and New Zealand beef in a few markets in the U.S. southeast. The
company has marketed itself as a buyer of only American product in the
past.
McDonald’s said it is concerned about the availability of lean ground
beef from the U.S., a statement both U.S. and Canadian producers say
lacks credibility.
Kendal Frazier of the National Cattlemen’s Beef Association said his
American group has been talking to McDonald’s about the issue, but the
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company has chosen “to go ahead with testing. But for now it is just a
test.”
Slaughter cow supplies, a major source of lean beef for grinding
processors, have been declining for several years. New methods of
marketing lower-end cuts have reduced the supply available to meat
grinders. Many processors have started selling lean ground meat
directly to grocery stores as consumer demand has grown for lower fat
hamburger.
Carol duBois of the NCBA said her group believes adequate supply exists
and it could work with McDonald’s to ensure it gets enough.
“Price is the issue. Demand is up on this product and McDonald’s has to
compete to buy it,” she said.
Lisa Howard of McDonald’s head office in Oak Brook, Illinois, said the
company is testing in 400 of its 13,000 American restaurants a meat
blend that has 15 percent imported beef.
“It forms only one percent of our total beef right now. But supply is
what motivated this testing,” Howard said.
Imported frozen beef is often a dime per pound cheaper than the U.S.
product. At one point this winter the price spread opened to nearly 40
cents. However, imported beef can cost more than domestic beef in
autumn, and having the flexibility to choose appears to be part of the
McDonald’s decision, say beef groups.
The U.S. divisions of McDonald’s and Wendy’s were the last of the major
fast food chains tied to U.S. domestic meat. Wendy’s still uses all
American ground beef but imported meat shows up in Burger King,
Hardees, Jack in the Box and Taco Bell menus.
McDonald’s is the largest buyer of Australian and American beef
worldwide and requires that all suppliers meet standards for animal
husbandry, transportation and slaughter.
That issue offends some groups.
“It is a slap in the face of our producers after they agreed to change
their animal husbandry practices to meet (McDonald’s) needs”, said
Nancy Robinson of the American Livestock Marketing Association. It
represents 800 auction markets, order buyers and larger producers in
Canada and the U.S.
“They say it is supply, but it is about supply and demand. Their
competition buy imported beef and they are now looking at it too,” she
said.
McDonald’s Canada started buying meat from Australia and New Zealand
two years ago. A company spokesperson said the majority of beef in
Canadian restaurants remains Canadian.
Neil Jahnke, president of the Canadian Cattlemen’s Association, said
McDonald’s decision is about price, but Canadian growers “shouldn’t get
too excited. Some of that U.S. beef is Canadian. In turn, we have
American cattle up here.
“Heck, we’d all prefer if they bought all their meat domestically, but
it is the reality of the business,” he said.
Quotas in Canada and the U.S. keep the supply of meat from outside
North America from replacing too much domestic product. Australia and
New Zealand are applying to the U.S. government for increases to those
quotas.
Jahnke said the effect of having a bigger market for imported beef
would drive up the import price, making it less competitive.
Frazier agrees and is firm on his group’s quota policy.
“We adamantly oppose any increase in quota. We oppose it and will make
every effort to make sure there are no increases,” he said.
The U.S. Australian beef quota is limited to 378,214 tonnes; New
Zealand can sell 213,402 tonnes.
In Canada, the quotas are “about 10 percent of that, plus there is some
Argentine,” said Jahnke.
