PHOENIX, Ariz. – If the United States wants to regain world beef markets, it must work closely with Canada and Mexico.
“If we are going to compete in the global markets , we have to harmonize up to a North American system,” said Chandler Keys, head policy analyst for the National Cattlemen’s Beef Association.
If this does not happen, Canada and the U.S. will lose markets to South America. Brazil, Uruguay and Argentina are poised to enter the world market as a meat exporting force.
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“They are getting serious in Brazil and they are talking about going toward grain-fed product,” he told the international markets committee at the NCBA convention Jan. 30.
Brazil is able to produce enough feed corn and soybeans to be competitive. It is also poised to be the top beef exporter for 2004, shipping out about 1.37 billion pounds, said Todd Drennan of the U.S. Department of Agriculture foreign agriculture service.
Brazil sells beef to Russia and the European Union and is capable of moving into more lucrative Asian markets. The U.S. hopes to open trade with Mexico first.
However, Mexico has said no movement can start until all BSE investigations are complete following a single U.S. case reported Dec. 23. It is likely to write the same specifications for U.S. beef as those applied to Canada.
The most challenging customer is Japan, which imports about 60 percent of its beef. Last year it bought about 300,000 tonnes from the U.S.
“There will be a lot of pressure on prices domestically if they are not able to fulfil those deficits,” said Drennan.
The Japanese are switching to other products like fish and poultry. Australia and New Zealand have tight beef supplies and will export their excess but Japan is likely to look elsewhere.
If markets do not open in a timely fashion, the U.S. will have to absorb extra production of about one billion lb. Closed markets have created the largest beef trade deficit in history. This will affect domestic prices because lower priced cuts must be used domestically.
Some cuts commanded a premium price in foreign markets whereas the Americans must grind these products or render them for pet food.
Rod Bowling, vice-president of food safety and quality assurance at Packerland Inc., was critical of those who say the U.S. does not need to export.
“It is arrogant, foolish talk. We need the Japanese and South Koreans back badly,” he said.
These Asian customers bought high volumes of products like short ribs priced at about $2.50 US per pound compared to their $1 per lb. value in the U.S.
Dennis Laycraft of the Canadian Cattlemen’s Association also pointed out how serious this devaluation can be. Canada sold products like short ribs for $4.05 (Cdn) a pound in the Asian market. Now, short ribs are worth 39 cents a lb. as trim for ground product. Offals is nearly valueless and is being rendered or ground.
The U.S. gave Canada a list of acceptable products for export. Laycraft said there should be some flexibility to manoeuvre because some banned products are not risky.
“Think carefully as you move ahead. The rest of the world is using your list,” Laycraft said.
