US / Japan Beef Trade
Since December 2003, when a single cow tested positive for Mad Cow Disease in Washington state, cattle producers have wondered how long it would be until the US regained access to its' entire export market for beef. Prior to BSE, exports accounted for approximately 9% of US beef production. Immediately following the BSE announcement, all countries closed their borders to US beef imports.
Over the course of 2004, several countries resumed beef trade with the US -- most notably Mexico and Canada. However, 2 of the 3 largest US beef export destinations, Japan and Korea, remain closed at this time. A key move in the direction of re-establishing trade with Japan was made in late October.
On Saturday October 23rd, the United States and Japanese governments reached a "framework agreement" to resume beef trade between the two countries. After three days of negotiation, the countries agreed that the US would be permitted to sell beef to Japan from animals less than 20 months of age. The USDA will establish a special marketing program for Japan to ensure that beef exports meet the specifications of the agreement. At the same time, the US has agreed to allow for the import of Japanese specialty beef to the US.
Japan is, or was, the United States largest export market. In 2003, the United States exported over 900 million pounds of beef to Japan. So, the potential impact of this agreement is great. However, there are still questions that still need to be answered.
First, how long will it be until trading resumes? It could take several weeks before both countries can make the necessary changes in their regulations. Specifics must also be worked out as to how the age of animals will be determined. It is possible that we could be well into 2005 before significant volumes of beef are exported to Japan.
Secondly, it’s unclear how much of the Japanese market the United States can recapture. Several additional cases of BSE have been confirmed in Japan in 2004 and we still don’t how Japanese consumers will react to US beef. Also, several other countries have increased exports to Japan in 2004 and it is not certain that the US can regain all the market that it has lost.
Regardless, the resumption of beef trade with Japan is a step in a positive direction. Many felt that once an agreement was reached with Japan, other countries would follow. Cattle prices have been strong in 2004, despite the closure of major markets such as Japan. Assuming trade does resume in a timely manner, it should only improve the price outlook for 2005.
For More Information
For additional information, please contact, Kenny Burdine.