Back in 2000, U.S. beef exports to Japan reached 1.16 billion pounds valued at $1.77 billion, and accounted for 43 percent by volume and 50 percent of the value of all U.S. beef exports. We also enjoyed a 53 percent share of Japan’s beef imports at the time. Those figures dropped to zero following discovery of the first case of BSE in the United States in December 2003.

Trade resumed in 2005, but only for beef from cattle slaughtered at less than 21 months of age. But beginning on February 1, 2013, Japan now accepts U.S. beef from cattle 30-months old or younger, and the change eventually could bring our beef trade with Japan back to pre-2003 levels or better.

A new USDA report on beef trade with Japan, included in the March Livestock, Dairy and Poultry Outlook report, provides background and outlines the potential for substantial growth in U.S. beef available to Japanese consumers in the coming months and years. It also notes some challenges that could slow that growth.

The authors note that under the 20-month rule, supplies of beef qualified for export to Japan were limited, not because of a shortage of cattle slaughtered at the right age, but because of the systems for verifying age. A small percentage of cattle arrived at the packing plant with proper age and source verification to qualify, and the other method, based on a physical examination of carcasses by USDA inspectors, tended to eliminate beef that could have qualified. Most cattle that met the “A40” age threshold based on physiological characteristics were actually 17 months old or younger, meaning many cattle between 18 and 20 months of age would not qualify.

Cattle 30 months of age or younger can be identified by dentition, or an examination of their teeth, and the vast majority of U.S. fed steers and heifers go to slaughter at well under 30 months of age.

Greater availability of U.S. beef, which typically costs considerably less than beef produced in Japan, should reduce retail prices, build demand and add value to cuts popular in Japan such as short plates, short ribs, hanging tenders and tongues.

In January, just prior to Japan announcing the change in age specifications, U.S. Meat Export Federation senior VP for the Asia-Pacific region Joel Haggard said retailers and meat buyers in Japan had been anticipating the change and were ready to buy U.S. beef once more becomes available. Retailers and food-service operators, he said, are likely to begin offering more U.S. beef once they have access to consistent supplies at more affordable prices.

The report suggests U.S. beef could reclaim market share from beef from Australia and New Zealand, as Japanese consumers tend to prefer our grain-finished products.

Over recent years, our exports to Japan have grown but not fully recovered. In 2011, the United States exported 207,000 tons of beef to Japan, the highest level since 2003, but still only 41 percent of the level exported in 2000. U.S. exports fell slightly in 2012, to 204,000 tons.

The USDA report says “over time, it is reasonable to expect that the beef trade will return to levels and composition similar to that which prevailed in 2003, before the BSE-related disruption to trade. The U.S. export market to Japan may even return to the peak levels reached in 2000.”

Several factors could, however, slow or limit the growth in beef exports to Japan. They include:

  • Japan’s population is slowly shrinking and aging, which may dampen beef consumption.
  • Income growth is slow in Japan and global beef prices are high.
  • Lower U.S. beef cow inventories and tightening supplies are forecast to lead to declines in U.S. beef production through at least 2015.
  • The Japanese yen has declined in value relative to the U.S. dollar.
  • An increase in Japan’s value-added tax will increase the consumer price of all products. Growth in U.S. beef imports by Korea, Taiwan, and Hong Kong results in competition for similar beef products.

However, the USDA report concludes, “relaxation of the rules governing trade between the world’s largest grain-fed cattle herd and the largest import market for grain-fed beef is likely to lead to steady increases in the volume of U.S. beef sent to Japan.”

Read the full Livestock, Dairy and Poultry Outlook report from USDA.