Albert Einstein said “the significant problems we face cannot be solved by the same level of thinking that created them.” When a lone, imported Holstein cow tested positive for bovine spongiform encephalopathy on Dec. 23, 2003, the U.S. beef industry encountered such a “significant problem.”
Fortunately, the single occurrence of BSE has not reduced domestic demand for beef. However, significant losses ensued due to closure of our export markets. Although some markets have reopened (e.g., Mexico and Jamaica), our most prized markets— such as Japan and Korea— continue to be inaccessible. Randy Blach of Cattle-Fax estimates that loss of U.S. exports resulted in approximately $10 per hundredweight (live basis) price reductions for fed cattle during 2004. The Foreign Agricultural Service reports that, while the U.S. exported $3.1 billion in beef during 2003, only 15 percent of those levels will be realized in 2004. Resumption of beef export trade will require a new “level of thinking”; we cannot hope to maintain the status-quo (pre-December 2003 export levels) without proactively addressing the desires of our export customers.
Negotiations during 2004 resulted in a “framework agreement” on Oct. 23 providing for resumption of beef trade with Japan via a special marketing program (Beef Export Verification) to be administered by USDA’s Agricultural Marketing Service. According to USDA, “the U.S. now will be permitted to sell beef and variety meats to Japanese importers from animals below 21 months of age.” The agreement with Japan will almost certainly serve as a precedent for reestablishing trade with several other countries.
It now seems clear that a documented system for verifying fed-cattle age will be necessary long term if exporters are to comply with Japanese wishes. Today, estimates of the number of fed cattle in the United States for which birth dates are known at the time of harvest range between 5 percent and 20 percent. However, producers initially know birth dates for a much higher percentage of the population; that information needs to travel with calves in a verifiable fashion throughout the production chain.
It is likely that future fed-cattle prices will reflect a need to document age of birth. Already during 2004, BSE has influenced fed-cattle prices; USDA Market News currently reports discounts of up to $35 per hundredweight (carcass basis) for cattle classified as over 30 months of age via dentition. Market pressure from agreements with foreign countries to resume beef trade may lead to further price differentiation at the time of fed-cattle harvest. Producers can take advantage of requirements to provide fed cattle that are less than 21 months of age
as such source-verification information could result in premiums in contrast to prices that will be provided for cattle that do not conform to this need.
Producers should implement a verifiable program to retain birth dates with calves during the upcoming calving season. This will be important regardless of operation size. If you need help, several private companies have USDA Process Verified programs that are recognized as meeting Agricultural Marketing Service requirements for achieving such objectives. You may also contact cooperative extension or your state cattlemen’s association(s).
Dr. Belk and Dr. Field are professors with the Department of Animal Sciences at Colorado State.
For more information about USDA/AMS Export Verification program, including a Power Point show about beef export requirements, go online to www.ams.usda.gov/lsg/arc/bev.htm.