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Ranchers.net

Aussies, Kiwis Claim No Fear
Of U.S. Beef’s Japan Return

By Richard Smith

TOKYO — Beef exporters in Australia and New Zealand are not afraid of the return of grain-fed U.S. beef to the Japanese market, while the 20-month anti-BSE age limit makes Canada a small player.

Last year's Australian exports of 405,000 tons here was a historic high, from a normal of 280,000 to 300,000 tons a year. Australia exported 159,280 tons of grain-fed and 191,444 tons of grass–fed beef to Japan through November, a total of 350,724 tons.

Australia is continuing to pursue Japan's grain-fed beef market, but the country's drouth is hampering efforts to increase grain-fed production, acknowledged the Japan deputy regional manager for Meat and Livestock Australia. "The drouth is obviously having a strong effect," Travers Nicholas said.

Feedlot capacity has expanded considerably, but grain prices, which rose to AU $500 a ton (US $439) from a normal of AU $230-$240 (US $202-$211), forced producers to reduce the number of cattle on feed, Nicholas explained.

As Australians are now seeing the arrival of a "La Niña," which would bring better than average rainfall, they expect a better harvest next year. "Healthy crops, healthy grain prices, are going to equal better grain-fed product into the feedlots," Nicholas said.

Japan’s banning of beef from the U.S. in December 2003 because of BSE caused a shortage here of grain-fed, marbled beef, Japan's retail consumer favorite.

Stepping into the void, Australia significantly shifted production to grain-fed beef. In production year 2006/2007, Australia produced 2.67 million grain-fed cattle, 570,000 more than in 2002/2003.

"The increase is 27 percent, which was almost solely to provide additional product to Japan, and to a degree the (South) Korean market," Nicholas said. "The 200-day and 300-day (feedlot time) product is certainly meant for Japan."

As a result, Australia monopolized at one point 91 percent of the import market. "We still do not have the final results for 2007, however, we estimate Australia to now supply approximately 84 percent of the total import market," Nicholas said.

The fact that New Zealand grass-fed beef export volumes here trebled in the past four years shows the meat has secured a greater marketplace presence, explained Meat and Wool New Zealand's Japan representative.

"I think a lot of people who traditionally did not look to New Zealand as a viable supply option, now at least have New Zealand on their radar screen, if not actually buying the product," John Hundleby said.

Hundleby said New Zealand exported 38,158 tons of beef and offal to Japan in production year 2006-2007, a 10 percent reduction from the previous year's 42,280 tons. Is U.S. beef pushing the New Zealand meat out?

No, Hundleby said, the decline occurred primarily because of strong demand in other markets. South Korea, at certain times in the past year, provided strong demand and was prepared to pay higher prices than the Japanese market.

"At certain times of the year, product that could have conceivably come here was being sold to (South) Korea," Hundleby said.

High exchange rates haven't helped. "In the Japanese market, there is a great reluctance on the part of end users to increase prices," Hundleby said.

Canada faces the same problem, as its strengthening loonie, which even rises over the U.S. buck, makes it difficult for Canadian beef to compete here.

As Canadian cattle in the proper 20-month and younger age bracket is limited, only 3785 tons (1864 tons chilled and 1921 tons frozen) of Canadian beef came in last year through October.

With such modest volumes, no way can Canada supply big-city supermarket chains, so the Canadian Beef Export Federation is concentrating its efforts on regional, smaller-scale chain stores. "Now, we are knocking at the door of supermarket people one by one," CBEF Japan marketing manager Shoji Nomura said.

Far from fearing the competition from U.S. beef, Australian and New Zealand exporters to Japan are welcoming the meat's return. "The more confidence people in this market have in beef again, the more everybody will benefit from it, including the domestic product," MLA's Nicholas said.
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