Jolley: Access to Japan? Don't Party To Hard
Real market success might be a long way off. First let's throw a party. Our largest export market is open again. Cue the band, toss the confetti and sip the non-alcoholic champagne. We don't want a post-party hangover in the morning – there's a lot of work to be done before we get anywhere near pre-BSE numbers.
The grand reopening was "conditional," a polite Japanese term meaning "we will still make things difficult for you." And then there are those twin bugaboos of relatively low supply and consumer resistance. At best, only10% of U.S. cattle meets Japanese market requirements. At worst, 75% of Japanese consumers say they won't buy because they're leery about the safety of American beef.
U.S. beef exports to Japan, already shaken by its own BSE problems at the beginning of the decade, were in a free fall before the export ban. It was like watching a Wile E. Coyote cartoon as the export market dropped off a cliff, plummeting by almost a third from a high water mark of nearly 800 million pounds in 2000 to 555 million pounds in 2002 before crashing to zero with a thud and a cloud of dust in 2003. U.S. beef packers will be dealing with an understandably gun shy public frightened by approximately 21 cases of mad cow disease found in the Japanese herd in the last five years,
Even though the ban has been conditionally lifted, Swift & Company CEO Sam Rovit knows there are pitfalls aplenty ahead. "We have got our work cut out for us. Sales will return slowly because U.S. slaughterhouses are unable to quickly find cattle that meet the conditions Japan will impose on imports," he said.
A pessimistic Mark Klein, Cargill's official mouthpiece, made this alarming prediction: "It may be three to four years before we return to levels seen before the market was closed.''
There are a few out there who believe Klein's statement might be overly optimistic, believing a wary Japanese consumer and a stronger Australian presence – they've doubled their market share since 2003 - will keep U.S. export levels way down, maybe never to return to 2003's $1.4 billion. The American pork industry, taking advantage of a great opportunity, enjoyed some boom times, too, and they're not likely to graciously turn that business back to their friends in the cattle business.
That would be a real fairy tale moment – The Pork Council's CEO Neil Dierks shaking the hand of NCBA President Jim McAdams' and saying, "Thanks, Jim, we enjoyed the extra business while it lasted but your members can have it all back, now. Glad we could help." Yeah, that'll happen.
The bad news was delivered by Japanese Food Safety Commission's Yasuhiro Yoshikawa who said that more than half of the comments collected in public hearings were against resumption of U.S. beef imports. Possibly a bigger blow to the immediate market for American beef in Japan was the results of a survey by Kyodo News that indicated 75% of respondents are unwilling to eat U.S. beef because of mad cow fears.
Going against that tide of public opinion, Yoshikawa said, ''The issues raised in the public hearings were all adequately debated within the prion research committee. I believe that as specialists, we took enough time to analyze these issues.''
Hiroko Mizuhara, secretary general of the Consumers Union of Japan doesn't buy Yoshikawa's assurances. "We are worried about the safety of U.S. beef as a whole, not just about beef from cattle aged up to 20 months," he said.
Another pothole in the route to the Japanese supermarket was uncovered in a report from the Japan Times which was picked up this morning by Meatingplace. Kiyotoshi Kaneko, a member of the prion committee that wrote the report describing U.S. beef as safe, said that the report had been misinterpreted by both the press and the government.
"The report does not recommend the resumption of U.S. beef imports," Kaneko said. "To say so is incorrect. The fact is that the renewal of beef imports was a diplomatic decision, made for us months in advance." Japanese politicians sabotaged the committee by limiting the questions it was to address, Kaneko charged. "Answering only the questions the government gave us would mislead the public," he said.
Meatingplace Editor Pete Hisey said Kaneko's charges could give ammunition to consumer groups, food safety critics and opposition politicians to attempt to re-impose the ban or at worst embarrass the Koizumi administration. Critics have charged that Prime Minister Koizumi caved in to pressure from President Bush and members of his administration
A critical problem, according to NCBA's chief economist, Gregg Doud is there aren't enough process verification programs in place. "Most U.S. processors don't yet meet the basic Japanese market qualification of certifying the age of cattle. It will be October of 2006 when the majority of our supply will meet their criteria,'' he said. "Until then, sales to Japan will be limited and the high cost of cattle will squeeze processors' profit margins."
But a look at a USDA web site (www.ams.usda.gov/lsg/arc/qsap.htm) shows the major packers; Cargill Meat Solutions, National Beef Packers, Smithfield Beef Group, Swift & Company, and Tyson Fresh Meats are ready with Quality System Assessment programs that monitor cattle entering their Beef Export Verification programs to make sure they fit Japan's 20 month maximum age requirement. .
QSA programs or not, the quantity and quality of supplies are suspect. "We're going out there and scouring the countryside and trying to line up cattle, but right now only about 5 to 10% of the U.S. cattle herd would qualify,'' Swift's Rovit said.
Acknowledging a marketing problem that might be more difficult to overcome than just managing a QSA program, Rovit also said, "Japan wants heavily marbled animals, and that's not the easiest thing to do at 20 months."
Unlike Swift, Smithfield Foods' Jerry Hostetter says they can meet export demand. "While industry officials say that less than 10% of U.S. cattle can be verified for processing for Japan, we have access to plenty of cattle,'' he said.
Cargill is "Just waiting for the green light,'' according to Klein. "The company has enough age-verified cattle available for now and expects sales to grow over time." Remember, though, that Klein doesn't expect a return to pre-BSE sales levels until as late as 2010.
Ag Secretary Mike Johanns gilded the export lily in his statement about the reopened market this morning when he said, "More than 94 percent of total U.S. ruminant and ruminant products, with a total export value of $1.7 billion in 2003, are now eligible for export to Japan." Guess he wasn't doing reality checks with Rovit, Doud or Hostetter.
For feedlots, the Beef Export Verification program means conforming to the requirements of each packer's QSA and maintaining separate records for each. Crist Feed Yard, KC Feeders, Midwest Feeders, Poky Feeders, Sublette Feeders and the yards run by Agri Beef are among the few that have created their own program.
Japan will require a paper trail from ranch to the retail and every step in between. Birth records alone won't do and producers will need third-party verification of their documents and herds. It night cost ranchers anywhere from 50 cents to a buck twenty-five per head to put their information into a database.
Speaking to an AP reporter last week, John Lawrence, a livestock economist and director of the Iowa Beef Center at Iowa State said, "It seems very few people know about this kind of stuff, but the writing's been on the wall for a long time,"
While the rules confuse many in the cattle business, it's now a confirmed, hard-core "death and taxes" fact of life. If producers want to take advantage of reopened markets in Japan and about 70 other countries, they'll need to get up to speed quickly.
"I think ranchers are sitting there asking, 'What are we supposed to be doing?'" said John Paterson, an extension beef specialist at Montana State University. Even he admits some of the fine points escape him. .
"The devil will be in the details," said Steve Pilcher, Executive V.P. of the Montana Stockgrowers Association, "and it's a matter of me not trusting Japan totally," he admitted. Pilcher met with Japanese Ambassador Ryozo Kato October 20 to convey the concerns of his state's cattlemen over the Japanese embargo on U.S beef, urging a quick end to it.
Putting a price on what the Japanese decision means to American cattlemen, NCBA's Doud said foreign market trade for American beef was worth about $15/cwt. to the fed market before an ill wind from the north slammed the door in 2003. Since then, the U.S. has managed to eke out a third of that with Japan representing half of the $10 still on the table. One economic estimate predicts that Japanese access could add a quick but modest $2/CWT.
One cloud on the horizon – Japan automatically imposes a higher tariff as soon as an imported product increases by more than 17% over the previous year. Such protectionist curbs could be triggered mid-year if U.S. beef imports jump too quickly
Real market success might be a long way off. First let's throw a party. Our largest export market is open again. Cue the band, toss the confetti and sip the non-alcoholic champagne. We don't want a post-party hangover in the morning – there's a lot of work to be done before we get anywhere near pre-BSE numbers.
The grand reopening was "conditional," a polite Japanese term meaning "we will still make things difficult for you." And then there are those twin bugaboos of relatively low supply and consumer resistance. At best, only10% of U.S. cattle meets Japanese market requirements. At worst, 75% of Japanese consumers say they won't buy because they're leery about the safety of American beef.
U.S. beef exports to Japan, already shaken by its own BSE problems at the beginning of the decade, were in a free fall before the export ban. It was like watching a Wile E. Coyote cartoon as the export market dropped off a cliff, plummeting by almost a third from a high water mark of nearly 800 million pounds in 2000 to 555 million pounds in 2002 before crashing to zero with a thud and a cloud of dust in 2003. U.S. beef packers will be dealing with an understandably gun shy public frightened by approximately 21 cases of mad cow disease found in the Japanese herd in the last five years,
Even though the ban has been conditionally lifted, Swift & Company CEO Sam Rovit knows there are pitfalls aplenty ahead. "We have got our work cut out for us. Sales will return slowly because U.S. slaughterhouses are unable to quickly find cattle that meet the conditions Japan will impose on imports," he said.
A pessimistic Mark Klein, Cargill's official mouthpiece, made this alarming prediction: "It may be three to four years before we return to levels seen before the market was closed.''
There are a few out there who believe Klein's statement might be overly optimistic, believing a wary Japanese consumer and a stronger Australian presence – they've doubled their market share since 2003 - will keep U.S. export levels way down, maybe never to return to 2003's $1.4 billion. The American pork industry, taking advantage of a great opportunity, enjoyed some boom times, too, and they're not likely to graciously turn that business back to their friends in the cattle business.
That would be a real fairy tale moment – The Pork Council's CEO Neil Dierks shaking the hand of NCBA President Jim McAdams' and saying, "Thanks, Jim, we enjoyed the extra business while it lasted but your members can have it all back, now. Glad we could help." Yeah, that'll happen.
The bad news was delivered by Japanese Food Safety Commission's Yasuhiro Yoshikawa who said that more than half of the comments collected in public hearings were against resumption of U.S. beef imports. Possibly a bigger blow to the immediate market for American beef in Japan was the results of a survey by Kyodo News that indicated 75% of respondents are unwilling to eat U.S. beef because of mad cow fears.
Going against that tide of public opinion, Yoshikawa said, ''The issues raised in the public hearings were all adequately debated within the prion research committee. I believe that as specialists, we took enough time to analyze these issues.''
Hiroko Mizuhara, secretary general of the Consumers Union of Japan doesn't buy Yoshikawa's assurances. "We are worried about the safety of U.S. beef as a whole, not just about beef from cattle aged up to 20 months," he said.
Another pothole in the route to the Japanese supermarket was uncovered in a report from the Japan Times which was picked up this morning by Meatingplace. Kiyotoshi Kaneko, a member of the prion committee that wrote the report describing U.S. beef as safe, said that the report had been misinterpreted by both the press and the government.
"The report does not recommend the resumption of U.S. beef imports," Kaneko said. "To say so is incorrect. The fact is that the renewal of beef imports was a diplomatic decision, made for us months in advance." Japanese politicians sabotaged the committee by limiting the questions it was to address, Kaneko charged. "Answering only the questions the government gave us would mislead the public," he said.
Meatingplace Editor Pete Hisey said Kaneko's charges could give ammunition to consumer groups, food safety critics and opposition politicians to attempt to re-impose the ban or at worst embarrass the Koizumi administration. Critics have charged that Prime Minister Koizumi caved in to pressure from President Bush and members of his administration
A critical problem, according to NCBA's chief economist, Gregg Doud is there aren't enough process verification programs in place. "Most U.S. processors don't yet meet the basic Japanese market qualification of certifying the age of cattle. It will be October of 2006 when the majority of our supply will meet their criteria,'' he said. "Until then, sales to Japan will be limited and the high cost of cattle will squeeze processors' profit margins."
But a look at a USDA web site (www.ams.usda.gov/lsg/arc/qsap.htm) shows the major packers; Cargill Meat Solutions, National Beef Packers, Smithfield Beef Group, Swift & Company, and Tyson Fresh Meats are ready with Quality System Assessment programs that monitor cattle entering their Beef Export Verification programs to make sure they fit Japan's 20 month maximum age requirement. .
QSA programs or not, the quantity and quality of supplies are suspect. "We're going out there and scouring the countryside and trying to line up cattle, but right now only about 5 to 10% of the U.S. cattle herd would qualify,'' Swift's Rovit said.
Acknowledging a marketing problem that might be more difficult to overcome than just managing a QSA program, Rovit also said, "Japan wants heavily marbled animals, and that's not the easiest thing to do at 20 months."
Unlike Swift, Smithfield Foods' Jerry Hostetter says they can meet export demand. "While industry officials say that less than 10% of U.S. cattle can be verified for processing for Japan, we have access to plenty of cattle,'' he said.
Cargill is "Just waiting for the green light,'' according to Klein. "The company has enough age-verified cattle available for now and expects sales to grow over time." Remember, though, that Klein doesn't expect a return to pre-BSE sales levels until as late as 2010.
Ag Secretary Mike Johanns gilded the export lily in his statement about the reopened market this morning when he said, "More than 94 percent of total U.S. ruminant and ruminant products, with a total export value of $1.7 billion in 2003, are now eligible for export to Japan." Guess he wasn't doing reality checks with Rovit, Doud or Hostetter.
For feedlots, the Beef Export Verification program means conforming to the requirements of each packer's QSA and maintaining separate records for each. Crist Feed Yard, KC Feeders, Midwest Feeders, Poky Feeders, Sublette Feeders and the yards run by Agri Beef are among the few that have created their own program.
Japan will require a paper trail from ranch to the retail and every step in between. Birth records alone won't do and producers will need third-party verification of their documents and herds. It night cost ranchers anywhere from 50 cents to a buck twenty-five per head to put their information into a database.
Speaking to an AP reporter last week, John Lawrence, a livestock economist and director of the Iowa Beef Center at Iowa State said, "It seems very few people know about this kind of stuff, but the writing's been on the wall for a long time,"
While the rules confuse many in the cattle business, it's now a confirmed, hard-core "death and taxes" fact of life. If producers want to take advantage of reopened markets in Japan and about 70 other countries, they'll need to get up to speed quickly.
"I think ranchers are sitting there asking, 'What are we supposed to be doing?'" said John Paterson, an extension beef specialist at Montana State University. Even he admits some of the fine points escape him. .
"The devil will be in the details," said Steve Pilcher, Executive V.P. of the Montana Stockgrowers Association, "and it's a matter of me not trusting Japan totally," he admitted. Pilcher met with Japanese Ambassador Ryozo Kato October 20 to convey the concerns of his state's cattlemen over the Japanese embargo on U.S beef, urging a quick end to it.
Putting a price on what the Japanese decision means to American cattlemen, NCBA's Doud said foreign market trade for American beef was worth about $15/cwt. to the fed market before an ill wind from the north slammed the door in 2003. Since then, the U.S. has managed to eke out a third of that with Japan representing half of the $10 still on the table. One economic estimate predicts that Japanese access could add a quick but modest $2/CWT.
One cloud on the horizon – Japan automatically imposes a higher tariff as soon as an imported product increases by more than 17% over the previous year. Such protectionist curbs could be triggered mid-year if U.S. beef imports jump too quickly
