Japanese action on beef imports heartens ranchers

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California cattle ranchers welcomed news that Japan has further expanded its market to U.S. beef, easing import restrictions that have been in place for nearly a decade.

The change, which took effect on Feb. 1, now allows the United States to export beef from cattle younger than 30 months of age, compared to the previous limit of 20 months. There are still restrictions on ground beef, but they will be phased out after a surveillance period to ensure that the new export protocol is proceeding smoothly.

Japan, the largest Asian market for U.S. beef, suspended American beef imports in December 2003 after a single case of bovine spongiform encephalopathy was discovered in a dairy cow in Washington state. It partially reopened its market in July 2006, to allow imports of some U.S. beef from animals 20 months old or younger produced under a special program for Japan.

Kenny Watkins, a cattle rancher from San Joaquin County and first vice president of the California Farm Bureau Federation, said the new agreement with Japan will be a boon for U.S. ranchers at time when cattle prices are already high. It will also eliminate the need for packers to sort and segregate animals specifically for the Japanese market, which makes for less recordkeeping and paperwork, he said.

Japan is currently the No. 2 market for U.S. beef in terms of value, with exports estimated to top $1 billion in 2012, according to the U.S. Meat Export Federation. California's share of the Japanese market was $90 million, according to the California Beef Council.

The federation said it expects U.S. beef exports to Japan will grow 45 percent this year, reaching a value of $1.5 billion, as a result of the increased access to that market.

Before the 2003 ban, Japan was the largest foreign market for U.S. beef, with exports worth $1.4 billion. California exported about $60 million worth of beef to Japan that year, the Beef Council reported.

With Japan further opening its markets, some 90 percent to 98 percent of the state's fed cattle will now be eligible for export, said Beef Council Chairman Mark Lacey, who runs cattle in Inyo and Mono counties. Before Japan raised the age limit, only about 20 percent to 25 percent of the fed cattle in California was eligible at the 20 months or younger requirement, he noted. The new demand will create more value for the state's beef producers and two main processors—Harris Ranch in Coalinga and National Beef Packing Co. in Brawley, he added.

California beef processors will also now be able to export more variety meats and parts of the carcass that aren't as popular with U.S. consumers but bring higher returns in Japan and other Pacific Rim countries, Lacey said.

"We're at a fairly substantial competitive disadvantage compared to the rest of the country because if we're not able to sell cattle to Harris Ranch or the feedlots in the Imperial Valley, then we have to go east of the Rockies, and that cost of transportation is definitely deleterious to our bottom line," he said.

Current U.S. cattle inventory is at its lowest in more than 60 years due to herd liquidations brought on by years of drought and poor rangeland conditions—both in California and other parts of the country.

Even though beef production has remained relatively steady during this time because of improved genetics, the reduced cattle supply has resulted in higher prices for producers, and this development with Japan will further strengthen the market, driving prices even higher, said Tim Koopmann, a cattle rancher in Alameda County and president of the California Cattlemen's Association.

"I think it's going to have an impact on our market structure and our market prices that we receive for cattle in California," Koopmann said.

He noted that while domestic consumption of U.S. beef has declined during the past few years, partly due to the economic downturn, that slack has been taken up by export markets, which have been growing.

"The fact that we're low in (cow) numbers and we've had increasing exports has kept our structure up fairly strong. I think this will now make it stronger," Koopmann said.

The U.S. Department of Agriculture said it is currently working with beef processors and producers to ensure the smooth implementation of the new agreement with Japan. Among the provisions of the agreement are that beef products produced before Feb. 1 must be accompanied by appropriate documentation and produced under the current export verification program. These products may not be commingled with products produced Feb. 1 or after, which must be produced under the new export verification program and accompanied by new export documents.

Koopmann said the work that the U.S. government and the beef sector have done to ensure a safe and quality product is finally being recognized abroad, noting the USDA animal disease traceability rule takes effect next month.

Also, Japan's food safety organization reported late last year that the risk from importing beef from cattle aged 30 months or younger from the United States, Canada, France and the Netherlands would be negligible to human health.

"I think it's important that Japan and the rest of the world understands that BSE in the United States is under control and our efforts to eliminate animal byproducts and animal parts in our feed supply have worked, and we do have a tracing system," Koopmann said.

Source: Ching Lee

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