DENVER, Colo. – The United States must regain its beef export footing within the next four years or risk losing its place in the world as a major supplier.
“With the kind of production increases we are going to experience in this industry in the course of the next five years, the importance of these exports will be underscored each progressive year from here,” Randy Blach, executive-vice president of the market analysis firm Cattlefax, said Feb. 1 during the National Cattlemen’s Beef Association annual convention in Denver.
“We’re going to need exports.”
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U.S. per capita beef consumption is steady at 67 pounds per year, but analysts anticipate a three billion lb. increase in beef production within a couple years as the American herd expands. Americans can consume about one-third of that extra meat through population increase, but the rest must find another market.
“It is going to be highly important for the profitability of this industry,” Blach said.
Beef demand is growing throughout the world, but Australia, Argentina and Brazil are already poised to fill the gap.
American producers lost $175 US per animal when export markets closed two years ago because low value products such as tongue and liver earned big dollars in foreign markets. Tongue, for example, sells for $10 a pound in Japan.
U.S. exports fell 85 percent following the closure of most markets at the end of 2003 after BSE was discovered in Washington state.
Tom Lipensky of the U.S. Meat Export Federation said between 1999 and 2003, 133 countries imported 2.5 billion lb. of U.S. beef. In 2003, 72 countries banned it and of that group, 27 continue the embargo.
Six countries accounted for 90 percent of the shipments and three of those remain closed, including Japan, which used to accept about one billion lb. annually.
Mexico accepted a large share of American beef exports and as of Feb. 1 agreed to take bone-in beef from cattle younger than 30 months from the U.S. and Canada.
It could be another four months before trade is renewed with Japan and that may only be about a third of what the U.S. traditionally exported. South Korea is still at the negotiating table.
“We have a battle on our hands in both those countries because of the (BSE) perception issue and we also have to fight other countries that have enjoyed our lack of access to those markets,” said Mike Miller of Cattlefax.
“We are going to have to spend some money and a lot of time and effort over there to reassure the consumers and get those markets back.”
Rebuilding lost consumer confidence in U.S. beef is the greatest challenge, Lipensky said.
Consumer surveys in Japan show confidence levels are around 10 percent for American beef.
“There is a clear preference for domestic beef,” he said. Part of that preference stems from universal testing of all cattle for BSE before carcasses are released for human consumption.
“Japanese have been sold on the idea of 100 percent testing means 100 percent safety,” said Lynn Heinze of the export federation.
Meat export federation employees are traveling to Japan to talk with officials there to see how the market can be recovered and how much it might cost to repair the damage.
BSE is a highly politicized issue in Japan and consumers are turning their backs on U.S. beef as they hear about problems in U.S. packing plants regarding proper specified risk material removal and incorrect shipments arriving in Japan.
South Korea is negotiating with the U.S. to resume trade perhaps by late spring. BSE was not so politicized there and confidence levels hover around 30 percent.
Taiwan has reopened its borders and consumer confidence is also around 30 percent.
Hong Kong now accepts U.S. beef but Canada has beaten it out of that market, making it almost impossible to make any headway there, Heinze said.
