Creekstone Premium Beef’s CEO was right. South Korea said they'd take beef from 31 U.S. beef plants, passing on seven others, and the USDA said "no." The USDA export policy isn't like Burger King. No special orders are allowed. You get your beef the way the USDA, carrying water for major U.S. packers, wants to sell it, or not at all. You can't have it BSE tested. You can't have beef from 31 plants if you don't take it from other plants owned by Excel, IBP, and Swift. The USDA has done everything it can to help the major packers maintain their concentrated market share of the U.S. packing industry, thwarting competition from smaller niche packers willing to build business like Burger King, willing to let global consumers have it their way.
The USDA has muddled the resumption of beef export trade with Asia. NCBA, the packer lackey, argues that Japan and Korea are trying to regulate the U.S. beef industry. That's bull. They aren't telling us how to regulate beef here. We are telling them how to regulate their beef industry by imposing our rules on them. Japan agreed to accept beef from the U.S. with lower standards than required from their own industry, despite Japanese consumer resistance. Relative to South Korea, Creekstone's CEO John Stewart, says, "The situation is just another issue with our USDA. This story needs investigation. I'm impressed by the fact that the USDA always seems to find a way to slow things down. I compare this situation to 38 graduate students taking their exams, and seven of the students failing. No one graduates until all seven could pass."
USDA Sec. of Agriculture, Mike Johanns confirmed that they had done this. The unapproved plants process unsegregated cattle from Canada. South Korea wants U.S. beef and the USDA told them they get what we sell them and like it or get none at all. The Korean Ag Minister says, "The U.S. does not consider the concerns voiced as being a problem, but from our view they are."
Bill Bullard, CEO of R-Calf USA, said "the USDA is effectively blocking competition from packers that are willing to meet customer demands." The USDA/AMI/NCBA response is that if you won't buy U.S. beef the way we want to sell it to you, we'll hit you in the nose with trade sanctions. You can't have it the way you want but you can't not buy it. You have to buy it and you have to take what we sell you! That's an interesting commercial approach, but one with dubious prospects of success.
Phil Seng, CEO of the U.S. Meat Export Federation said, "When the U.S. discovered BSE and Japan closed its market to U.S. beef, USDA and U.S. industry misread what was happening in Japan. The U.S. was moving to restore beef trade with Canada and believed that the Canadian-U.S. model would be the model for the world to restore trade with other countries, while Japan was clearly focused on other strategies. There was a disconnect from the beginning between Japanese and U.S. officials." No Kidding.
A cattleman representing NCBA told me that in Washington the USDA asked his group what they should do next. The response was, "find out from the Japanese what it takes to restore trade." If not, "retaliate." The first response would have been a good plan 2-3 years ago but no one in the U.S. beef industry or USDA asked the Japanese what they wanted or listened to what Japanese consumers were saying. Creekstone and several other packers doing business in Japan were listening to their customers and were told they'd accept BSE tested beef. The USDA, carrying water for major packers, wouldn't allow it. USDA spokesman Ed Lloyd gave the USDA position that BSE "testing is not a food safety tool." Nobody in the U.S. said that it was, but the Japanese consumer wanted testing and was willing to pay for it.
GMO soybean testing is not a food safety tool either but the USDA allows GMO testing for which Japanese buyers pay premiums to U.S. non-GMO soybean producers. Without the right to test, we couldn't identify non-GMO soybeans. The USDA permits GMO testing of soybeans for which there is no scientific food safety rational, but not BSE testing for beef. This hypocritical policy difference is only explained by special interest influence of major beef packers on USDA. Excel and IBP have resumed trading beef to Japan from their Canadian subsidiaries, so currently have that business to themselves not wanting competition from other U.S. packers.
U.S. cattlemen are losing hundreds of millions of dollars in lost beef trade to Asia because the USDA was committed to special interests of U.S. packers and disconnected as Phil Seng described, from Asian consumers. "Find out what it takes to restore trade." What a novel concept. What if it requires actually giving the Japanese and Korean costumers what they want and are willing to pay for? The USDA and U.S. beef industry has shown no inclination whatsoever to sell the Japanese and Korean consumers what they want if it's not what the USDA wants to sell them.
Instead they have the inclination to "retaliate." The USDA’s response to South Korea shows they learned nothing from the mess they made of Japan. It's going to cost U.S. cattlemen an enormous amount of equity, paying for their mistakes.
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