Calgary livestock analyst Barbara Duckworth recently covered the National Cattlemen’s Beef Association convention in Phoenix, Arizona, and filed these reports.
PHOENIX, Ariz. – The world economic crisis has hurt United States meat exports and lowered cattle prices, but like all cycles, it too shall pass.
“I think we are going to see prices improve for our product,” said Brett Stuart of Cattlefax at the National Cattlemen’s Beef Association annual convention held in Phoenix, Arizona Jan. 28-31.
He and other market analysts foresee a time when world meat inventories are too low to fill demand as big producers like the U.S., Canada, Australia and New Zealand are reducing cow herds.
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The U.S. is still in export recovery mode after it lost $11 billion in trade revenue between 2004-07 when BSE closed borders. However, strides are being made and trade is returning to previous levels even with restrictions by Japan.
South Korea reopened to the U.S. last year and is taking 9.4 million pounds a week. This year it is likely to buy about 500 million lb. of beef. That should help U.S. total imports increase from 1.9 billion lb. in 2008 to 2.4 billion this year.
Japan is taking a quarter of the beef it purchased in 2003. That trade was worth $1.4 billion and is now less than $400 million. Japan continues its stance on only accepting beef from cattle younger than 21 months of age, but shipments have improved as more source and age verified cattle have been found to fit the age requirement.
Loss of the Japanese market was significant, said Stuart. For example, in the pre-BSE period, 27 million beef tongues were shipped annually to Japan and sold for $15 each.
Regaining greater access to Japan will be a long and protracted process, said NCBA chief economist Gregg Doud.
The U.S. said it wants full access or nothing but it agreed to compromise in its Korean deal. The Canadian agreement with Hong Kong to accept all products from cattle younger than 30 months and boneless beef from those older than 30 months shows flexibility is possible.
Being shut out of Japan, however, made the markets in Canada and Mexico more attractive. The two countries accept 60 percent of U.S. beef exports, which adds $60 per head in value to an American steer, said Stuart.
Getting into the European Union is still discussed but that region has a cloudy economic future and the EU still refuses to buy beef containing growth hormones.
There is an opportunity to fill an 11,500 tonne quota but only 4,500 tonnes went overseas last year, said John Brook, the U.S. Meat Export Federation executive responsible for trade in Europe and the Middle East.
Most of that meat ends up in high end hotel restaurants. That is a small market and with the economic downturn, is unlikely to grow because of the lack of consumer confidence in Europe.
“Their sense of wealth is having a big impact on people’s purchasing decisions,” he said.
Most buy within their budgets and do not live on credit like the Americans, who in recent years spent more than their household incomes on consumer goods.
“Unlike the Americans, few people in other countries eat food bought on credit,” he said.
Nor does Brook see much change in the ongoing growth hormone dispute even though the World Trade Organization said sales should resume because the products are safe.
The U.S. and Canada implemented penalties using rotating tariffs worth $160 million on a selected list of products. While some companies resent the tariffs, he does not expect Europe to relent any time soon.
