Before that one BSE cow turned up in Washington, 32 percent of U.S. beef exports were going to Japan. After the cow was discovered, Japan shut its borders to American beef, and last year, the industry lost about $1.5 billion because of it. But last October, Japan and the United States agreed on principles that should result in the resumption of exports.
Details are still being hammered out, but one condition currently in the agreement is that beef exported to Japan will come from animals less than 20 months old. USDA’s Agricultural Marketing Service plans to implement the Beef Export Verification Program to provide independent verification of age.
According to USDA’s Web site, records used to verify an animal’s age must meet at least one of the following criteria:
a) Individual Animal Age Verification
b) Group Age Verification
c) Insemination Age Verification
d) USDA Process Verified Animal Identification and Data Collection Services
In the absence of such records, A40 carcasses, as determined by grading, would also be eligible. “They had to have a zero tolerance on animals over 20 months; the reason the A40 was chosen was that it is so selective,” says Lynn Heinze, vice president of information services for the U.S. Meat Export Federation. “Seventeen months is typically the oldest that will make the cut.”
But the offal from those A40 carcasses would not be accepted, meaning they would lose significant value, as offal products, including tongues and high-quality intestines, are desirable to the Japanese market. That’s why USMEF is working on finding substitutes for those products. “We are in the process of delivering a new cut book that will be available for the Japanese market,” Mr. Heinze says. “It provides suggestions to the customer and the packer of cuts to substitute for the cuts that are no longer available, alternative cuts and ways of handling and cooking that cut.”
Identification and documentation
Waiting for the agreement to be finalized is a double-edged sword, says Mark Gustafson, senior vice president of international sales at Swift and Company. “We’re losing the young cattle we have that would be ready in May, June and July, which would give us the greatest number of carcasses to work with,” he says. “But as more time passes, we hope producers are identifying their animals better. That’s where there’s a real rub. Producers are saying, ‘Will we get paid for it?’ but the other side is once Japan opens, we’ll need to have age-verified animals.”
The major implication of the Japanese agreement might be making animal ID an even more important
issue, says Bob Smith, who offers veterinary research and consulting services in Stillwater, Okla. “Many cow-calf operations have gotten along fine without ID; now for export reasons it will be more important. This will create more of an awareness of the need to keep records. When they’re applying those tags — it’s a good time to record birth date or birth month.”
At the ranch level, recording those birth dates or months could provide a real challenge in some areas. “The USDA will accept the date the first calf in a group was born and apply it to all,” says Mike John, director of the MFA Health Track Program, president-elect of NCBA and a cow-calf producer from Huntsville, Mo. “If a producer has an extended calving period, then the chances of the youngest one being finished in time to make the age requirement is low. Our marketing system isn’t designed around age sorting, but if age becomes enough of a value component, we’ll be sorting by age. There will be a growing incentive for producers to do true age recording.” That chance, obviously, doesn’t come again. “The cow-calf segment is where the value resides,” Mr. John says. “If we miss out on the opportunity to do the recordkeeping, we can’t recapture it later on.”
Another result of the agreement might be a boost in calf-certification programs, Mr. John says. “Large producers used to feeding their own cattle and direct marketing will find it easy to comply,” he explains. “The vast majority will need some help to give them a platform to comply and offer documentable traceback and an ability to withstand an audit. Health certification companies can do all that.”
For the producers who’d rather do it on their own, the important thing is likely to be the audit trail, not necessarily who did the certifying. “What I hear USDA say is that an acceptable BEV Program needs an auditable trail,” says John Lawrence, professor and director of the Iowa Beef Center at Iowa State University. “The cattle will move with a signed affidavit stating the description of the cattle including how they are identified, the contact information and the claim (birth dates or range). The USDA wants the signature backed up with information kept at the ranch, starting with a brief written management description and the supporting documents (calving book, sales receipts, vet bills, financial statements, etc.). The feedlot will also need a brief written management description and the supporting documents, and they will need to be able to manage the affidavits from the cow herds in case there is an audit.”
These age restrictions are also going to show how animal ID, source verification and age verification are all commingled, Mr. Gustafson says. “The producer needs to understand there are going to be requirements. Animal ID is a component to all of the above; that’s where you start. The amount of information that will track with the animal — that’s the question.”
For the time being, there won’t be enough animals with that information to fill their needs. “If the information is not there, we have to sell into the market they qualify for,” Mr. Gustafson says. “We’d like to be able to require (that) the information comes with the carcasses so we can market in whatever market we can, but the government will have to mandate it. For the packer to mandate it, unless there’s economic incentive, I don’t think that’s going to happen.”
At North Platte Feeders, they have begun work already on an intense ID system, says Turk Stovall, who heads up business development there. “Anything source verifiable, we put an electronic ID in and represent it as a source-verified animal. Right now the industry is paying a premium for that. Japan will be similar except for the age requirement.”
Their document-based system goes back to the ranch level. “It’s creating an unbelievable amount of paperwork in the feedyard,” Mr. Stovall says. “When customers put multiple sources together, we have to draw lines — it’s not worth the work to trace them all. We’re more selective on the cattle that come through on that management system. But I hope we as an industry don’t view those as bad cattle. In the future, all these calves that we have the ability to put source and age to — that could someday be the market.”
He sees premiums for 20-month, source-verified cattle now and to come. “In the long term, once it becomes standard, it will be more a discount system than a premium system.”
Dr. Lawrence agrees that cattle meeting those criteria will see a premium initially. “As long as the supply of age-verified cattle is less than the demand, there will be a premium,” he says. “I expect the supply of age-verified cattle to increase quickly as ranchers see the premium and realize that they can easily provide the information.”
In most cases, the industry is already meeting the age standard — estimates are 80 to 85 percent of cattle harvested are between 18 and 24 months. So this shouldn’t require much of a change in management practices, Mr. Stovall says. “As an industry, we’ve already stepped away from big yearling production practices. The biggest challenge is that people will be more conscious about marketing calves — you might not want to hold calves until December and then sell them. Weight and age will have to play more of a balancing act.” The practice of holding calves through the winter at low rates of gain may become less profitable.
But if most cattle meet the age requirements, the big question will be proving it. “An inability to document may result in a discount,” Dr. Smith says. “We’re seeing more and more documentation in feedyards. And the feedyards are asking for it because packers are asking for it.”
With the growth of source-verification programs on the rise, recordkeeping has had a boost already. “Our current estimate if we started today, we’d have 15 percent that would qualify with some paper record,” Mr. Heinze says. “The source verification is already out there.” With those carcasses that would qualify as A40, the number would rise to somewhere in the neighborhood of 30 percent.
Things remain uncertain as talks with Japan continue. According to USDA’s framework agreement, they’ll start talking in July about raising the limit for Japan to 30 months and younger — the international standard. “The scientific community worldwide has accepted 30 months,” Dr. Smith says. “So whether or not this will stay 20 months forever remains to be seen.”