Japan
Key to Beef Export Market
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The continued loss of Japan and other large customers flattened 2004
U.S. beef exports. Exports fell to 288 metric tons in 2004, a 76 percent
drop from 2003. Their value was $718 million, an 80 percent decline
from the previous year. The first U.S. case of Bovine spongiform encephalopathy
(BSE) was discovered in late December of 2003.
Although Japan, the long-time biggest buyer of U.S. beef, agreed in
October to resume U.S. beef imports, negotiations have moved slowly.
Japan in 2003 purchased 352 metric tons of beef with a value of $1.3
billion.
Cattle-Fax figures show the net value of U.S. beef and variety meat
went from $1.25 billion in 2003 to a loss of $2.4 billion in 2004.
Loss of exports initially cost cattle feeders about $14/cwt. and the
recovery of the Mexican market still drops prices by about $10 or
$11/cwt. said Dave Weaber, Cattle-Fax research director.
Projections are that the U.S. will export 1 billion pounds of beef
in 2005, compared to the 450-470 billion pounds last year. The 1 billion
pound projection assumes that Japan will soon resume beef purchases
and be followed closely by Korea, Weaber said.
Japan has an internal public relations problem in backing away its
earlier vehement position that 100 percent of domestic beef be tested
for BSE, said Lynn Heinze, vice president of information for the U.S.
Meat Export Federation. They have removed specified risk materials
for some time in domestic carcasses, but not publicized that fact.
Japanese officials are now telling consumers that removing SRMs is
the only way to ensure beef is free from BSE, he said.
For the past 10 years Japan has been the biggest customer of U.S.
beef, but with some large fluctuations. Purchases plunged after E
coli was found in Japanese bean sprouts in 1996 and again after BSE
was discovered there in 1991.
“It is a market that has responded and rebounded well. But because
food is such a culturally important thing in that market, a food safety
situation or BSE threat is something that the Japanese food consumer
holds very dear,” Heinze said.
Japan’s market share of U.S. beef exports had dropped prior
to 2004. Cattle-Fax figures show that Japanese had 46 percent of that
market in 1999, compared to 36 percent in 2003. Korea, which tied
with Mexico for second-place in 2003, went from 13 percent of U.S.
market share in 1999 to 23 percent in 2003.
Japan was the biggest buyer of U.S. beef and variety meats in 2003.
Many products purchased in recent years—short ribs, chuck rolls,
intestines and tongue—bring much more money in international
markets.
For example, about 85 percent of U.S. beef tongues are exported and
80 percent of those exports go to Japan. That tongue has a value of
less than a dollar in the U.S., where most are used in rendering or
dog food. Since that same tongue commands $6 to $9 in the Japanese
market, “the difference is very significant” Heinze said.
Heinze in early February said a major difficulty to regaining exports
is that Mexico is now the only large buyer. Mexico, the No. 2 customer
in 2003, bought 43 percent less beef in 2004 after lifting its ban
in March of 2004. But Mexico’s monthly beef purchases have increased
steadily and are close to 2003 levels.
The European Union (EU) is now the No. 2 market for U.S. beef, “which
surprises a lot of producers in this country,” Heinze said.
Meat sold in the EU must be hormone-free. They purchased 43,000 metric
tons of U.S. beef in 2004, considerably higher than the 12,000 metric
tons in 2003.
Although it once had a surplus of beef, the EU is projected to have
a 200,000 metric ton deficit this year. “That will only grow
in the next four to five years, so we are very aggressive in getting
into that market,” Heinze said. EU beef supplies dropped due
to agriculture policies driving down production and herd reductions
from BSE. ©
