DJ INTERVIEW: US Beef Exporters Eye N. Asia With Urgency
BRISBANE(Dow Jones)--U.S. beef exporters hope shipments to Japan and South Korea can resume during the northern hemisphere summer, in part to soak up some of an expected "glut" of meat about to hit the domestic market, said Philip Seng, President and Chief Executive of the U.S. Meat Export Federation, on Friday.
The jump in the volume of meat about to hit the U.S. market is so high that Seng talked of a "renewed urgency" to open North Asian markets. Audits by U.S. authorities of the 38 meat plants that will supply Japan are underway, to be followed by meetings between officials to discuss the results, with Japanese inspection teams expected to arrive in late May, he said.
"So we would look at late July probably, when there might be some announcements for us (as to) when the opening would occur," he told Dow Jones Newswires. "It's going to happen this summer," he added about the restart of trade. The U.S. also is negotiating with South Korea, with Korean officials scheduled to arrive in the U.S. on May 7, to inspect meat plants, he said. "That's in progress," he said on the sidelines of the World Meat Congress in Brisbane.
In a move that devastated the U.S. beef industry, Japan, South Korea and many other nations banned imports of U.S. beef in December 2003, following the discovery of a case of bovine spongiform encephalopathy, BSE, or mad cow disease.
Japan allowed imports of U.S. beef to resume in December 2005, but reinstated the ban on January 20, when spinal product was found in one shipment, which breached import protocols. Japan and South Korea turned to Australia to help meet the supply shortfall, providing a massive boost to Australian exporters, who now export almost A$5 billion of beef a year.
U.S. Meat Supply To Grow Strongly Seng said the loss to the U.S. industry since December 2003, has easily exceeded US$10 billion, with the loss to the Japanese industry at more than $10 billion. The import bans have led to bankruptcies, unemployment, U.S. plant closures and dramatic losses to cattle producers and all collateral industries, including shipping, Seng said.
"It's had a ravaging effect both in our country and also overseas," he said. "It's been a huge setback." The U.S. exported about 12% of its beef production when all export markets were opened, with export beef selling for higher prices than in the U.S. domestic market.
"The export market creates tremendous upward pull for even the domestic market," he said. "So not having that upward pull has brought prices down," at its worst 18 months ago by up to $175 a beast for producers, now about half that, he said.
When the BSE case was discovered in 2003, the U.S. was at the bottom of its cattle cycle, but beef production is now growing as are cattle weights, he said. Moreover, U.S. production of pork and poultry are also growing strongly, with avian flu also impacting demand, he said. "It looks like the supply of red meat will be up over 6% for this next quarter," Seng said. Major U.S. meat packers and exporters are well stocked and having "difficult times right now," he said.
"There is a glut of product in the U.S. and these disease issues...have really been difficult for us," he said. He added that there is a renewed urgency for the U.S. to open the Japanese and South Korean markets again. A major aim of the U.S. is to work collaboratively with Australia "to create an atmosphere" to grow North Asian beef markets.
"We need to restore confidence in beef," he said. Japanese beef consumption has fallen to about 7.5 to 8.0 kilograms per person a year now, from more than 11 kg in 2003, he said. U.S. exporters will resume trade slowly when the ban is lifted and were encouraged by their brief return in December and January, he said. "We see a lot of pent-up demand in Korea as well," he said.
-By Ray Brindal, Dow Jones Newswires, 61 (0) 418 417 104 -Edited by Jarrett Banks