040417 58 Countries Still Reject US Beef

April 10, 2004

It has been nearly four months since one cow among 96 million head of cattle in the United States tested positive for mad cow disease, yet 58 countries still have some form of ban on U.S. beef.

The economic toll is considerable. Of the total U.S. beef production in 2003 -- an estimated 26.30 billion pounds valued at $27 billion (2002 figure, the latest available) -- 2.58 billion pounds worth an estimated $3.266 billion was exported, according to the U.S. Department of Agriculture.

The 2004 export numbers will tumble, however, showing the effects of the rapid closure of markets after the discovery of a 6 1/2-year-old Holstein with mad cow disease at a Washington ranch on Dec. 23.

Steven Kay of Petaluma, editor and publisher of Cattle Buyers Weekly, estimated in an article this month in Meat and Poultry magazine that the export ban may be costing the U.S. beef industry and the nation's economy "anywhere from $100 million to $300 million per week,'' given the ripple effect of lost income and sales. In addition, Kay estimates that 1,000 jobs have been lost in meat packing and other related fields.

The nation's largest importer of U.S. beef is Japan, taking 32% of U.S. exports, followed by South Korea, Mexico and Canada. Japan enacted a ban on U.S. beef days after the discovery of the diseased cow, and negotiations to reopen markets have hit dead ends.

Japan insists that all cattle used to produce beef for export to Japan be tested for bovine spongiform encephalopathy, or mad cow disease.

U.S. Agriculture Secretary Ann Veneman responded, "There is no scientifically valid reason for 100% testing.'' She said that is particularly true for cattle younger than 30 months because they are not vulnerable to the disease.

U.S. cattle industry spokesmen make the case more colorfully: "Testing all animals equates to drawing blood from elementary school children to determine if they have Alzheimer's disease,'' said Bruce Berven, vice president of marketing at Harris Ranch Beef Co. in Selma (Fresno County), which exports 7% to 8% of its annual production (250,000 head of cattle), or did prior to Dec. 23.

Darrel Sweet, president of the California Cattlemen's Association and a fifth-generation cattle rancher with 900 acres on the Altamont Pass, said, "I know a lot of work is being done'' among U.S. and Japanese negotiators, and he supports Veneman, a Californian. "But at what point does a food safety issue shift to a trade issue -- an unreasonable trade restriction?'' he asked.

In a series of recent exchanges in and out of diplomatic channels beginning March 29, Veneman and U.S. Trade Representative Robert Zoellick wrote Japanese Agriculture Minister Yoshiyuki Kamei to propose that the two countries consult with the World Organization for Animal Health in Paris, the international standard-setting body for animal diseases, to try to resolve differences and come up with a satisfactory number for animal testing.

The next day they read the Japanese response in news reports from Tokyo, in which a vice farm minister was quoted as saying those talks would be meaningless unless they focused on Japan's position that every head of cattle for export be examined for mad cow disease.

However, Kamei reacted positively to a March 15 USDA announcement of an expanded surveillance effort for mad cow disease. Veneman said that some 268, 000 animals will be tested over a period of 12 to 18 months beginning this spring, compared with the 20,543 tested in fiscal year 2004.

There have been some trade negotiation successes since the beef bans were imposed. Mexico has largely reopened its border to U.S. beef products, accepting boneless beef, and trade with Canada is normalizing. However, South Korea, the other major beef importer, still has its ban in place.

One exporter who has felt pressure since Dec. 23 is Jim Geller, president of Geller International in Burlingame. Before Dec. 23, his export management company contracted with U.S. packing houses to trade with overseas importers who delivered beef throughout Asia. Only the Philippines kept its borders open to U.S. beef.

Geller had long ago diversified, but his business has shifted heavily toward fish, pork and other foods while the bans are in place.

Geller gives credit to the USDA for appropriate steps taken -- the increased surveillance, for example -- which is not easily done in a major government bureaucracy. The USDA has 110,000 employees and a program budget of $113 billion.

"Where I fault the USDA is in the negotiators they have sent to Japan,'' said Geller, who speaks Japanese. "You need people with a deeper understanding of the Japanese negotiating skill set. You need people who know how to talk to the Japanese, and we are sending people who are tripping on the welcome mat."

Sweet said that prices paid to Japanese ranchers have risen 60% to 70% during the trade stalemate with the United States, so one can speculate about protectionism as a motive.

He also said that there is disagreement in Japan over the ban. The Japanese Supermarket Association has urged Kamei to resist Washington's effort to gain early resumption of U.S. beef exports. Meanwhile, the Japan Food Service Association, representing restaurants, has asked that imports of U.S beef resume as soon as possible.

Australia has largely been the source of imported beef to Japan since the U.S. product was banned, and customers have complained about missing the acquired taste of U.S. beef, Sweet said.

"Fortunately, domestic demand has remained strong,'' said Sweet, who sells his cattle to Harris Ranch. "Our consumers have confidence in the beef supply. We are hoping that the steps the USDA has taken will encourage the Japanese to come to the table. I haven't heard a lot of optimism on that. It takes time to re- establish those markets.''


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