Larger market good news for producers


GOSHEN COUNTY – The announcement last week of Japan lifting its years-long ban on imports of beef from the United States is good news for Wyo-Braska producers, but it may not be the overarching panacea some in Washington, D.C., might want people to think.

“I’m very cautiously optimistic,” said Ivan Rush, retired University of Nebraska Extension beef specialist and a board member of the U.S. Meat Export Federation, a market group supporting U.S. producers on the world market.

“I am optimistic, I am thrilled,” Rush said. “We’re making some progress, but I still have concerns with our international markets.”

Steve Paisley, University of Wyoming Extension beef specialist and interim director of the Hageman Sustainable Agriculture Research and Extension Center in Lingle, agreed.

“Any increase in export markets, any increase in demand, is going to be beneficial to the industry as a whole,” Paisley said. “It’s an optimistic sign that fits in with what we’re producing.”

Japan blocked imports of all U.S. beef products – which totaled about 1 billion pounds annually – in 2004, following discovery the year before of bovine spongiform encephalopathy – also known as BSE or, colloquially, as Mad Cow Disease – in herds in this country, said University of Wyoming Agriculture Economist Dr. Chris Bastian. Then, slowly, beginning in about 2013, exports of American beef to Japanese tables began building again, increasing from about 80,000 pounds in 2013 to an estimated 600 million to 700 million pounds this year, according to recent projections.

The market in Japan is focusing on the “high-value” cuts, choice and better, which Wyoming and Nebraska cattle producers excel at bringing to market. That’s due, in part, to ongoing marketing efforts by the USMEF, which has been focusing on the Asian market in general and Japan specifically to promote meat from the United States.

“The Meat Export Federation is spending a lot of money in Japan right now, trying to educate restaurateurs how delicious a thick steak is, cooked medium rare,” Rush said. “They’re developing some restaurants there where you go in, order a steak and it’s cooked rapidly. That’s going over really well.

“I think this means a lot to cattle producers in Nebraska and Wyoming,” he said. “We produce some of the highest-quality beef there is in the world and the Japanese have developed a taste for our high-quality beef.”

And Rush said he’s already seen some economic impact from the announcement, where prior, the export value of a fat steer was slightly less than $300, it’s recently reached almost $330 for that same critter.

One major change the Japanese government has made in its import rules is dropping restrictions on beef animals 30-months-old and older, Bastian said. While those older animals – mostly milk cows or seed bulls which are past their prime – definitely won’t qualify as prime beef for the high-end table, they can contribute lesser-quality cuts to other areas of the market.

“There’s been a lot of focus on steaks, which represents less than 15 percent of the carcass, in terms of poundage,” Bastian said. “If we’re only selling steaks, the high-value stuff, that still means there’s a lot of that beef animal left to be consumed.

“It’s a very important market, it’s very important for them to demand our beef,” he said. “If we think about beef produced from animals greater than 30 months … that should improve the demand in the Japanese markets.”

Rush and Bastian agree the potential increase in demand won’t have a significant impact on what consumers pay for their beef at the local market. While Japan does currently represent about 25 percent of the total U.S. beef exported annually, exports in general represent a relatively small percentage of total annual beef production in this country.

“We produce about 26 billion pounds of beef in the United States,” Bastian said. “Japan has been importing from us less than 1 billion pounds. We tend to consume, in the U.S. on average, about 90 percent of the beef we produce.

“This may have some effect on the domestic market, but it won’t be a big, huge amount on current domestic beef prices,” he said. “Again, time is going to tell, based on how much demand there is for these lower-value cuts from animals more than 30-months (of age). If there’s a big increase in that, we could have some increase in (domestic) prices. If we don’t see that much, consumers might not even be aware of a price increase.”

Another area increased exports to Japan could benefit is other commodities – corn and other inputs on the feeding end for cattle, Bastian said. With increased cattle prices, he’d expect to see greater demand for those feed inputs. But don’t expect massive per-bushel increases in the value of corn any time soon, he said.

“I don’t think we’re going to see a huge increase very fast,” Bastian said. “It will help a little bit, but it’s not going to take current corn prices and increase them by 40 percent. That’s not going to happen.”

Overall, though, the news of another expanding market for U.S. beef is a positive. But it’s also a slow process, Rush said. It takes time to get infrastructure and agreements in place, all the minutia of trade deals that has to take place before the first pound of U.S. beef is shipped.

“What that means for producers here and across the United States, it represents an increase in demand for beef, which translates into upward pressure on cattle prices,” Bastian said. “And that comes at a time when we’re seeing the supply of
cattle increasing.”

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