U.S. Seeks to Re-Establish Market After Japan Agrees to Lift Beef Ban

By Jim Stafford, The Daily Oklahoman

Jun. 22–For almost two years, the U.S. cattle industry has had an on-again, off-again courtship with Japan. Wednesday, it was on again, with Japan once again saying that it will lift its ban on American beef shipments.

Japan banned U.S. beef shipments in the wake of the nation’s first case of mad cow disease discovered Dec. 23, 2003, then it announced in October 2004 that it would begin allowing U.S. beef imports.

But Japan reversed itself in January of this year, halting U.S. beef shipments after inspectors discovered a bovine spine in a shipment of veal from the United States.

“Japan agreed to resume U.S. beef imports on the condition that we find no further problems during onsite inspections,” Agriculture Ministry official Hiroaki Ogura said.

U.S. Ambassador Thomas Schieffer welcomed the conditional agreement, saying he was hopeful the outcome would lead to an import resumption.

But Wednesday’s reopening announcement will have more of a “feel good” effect on the U.S. cattle markets — at least in the short term — than an actual economic benefit, a market economist with Oklahoma State University said Wednesday.

“In the short run, it really doesn’t change much,” said Derrell Peel, a professor and extension livestock marketing specialist at OSU. “The bigger issue is we have been out of that market for two, two and a half years. What it says is we now have the ability to go in and begin the process economically of trying to re-establish that market.”

Once the largest export market for U.S. beef, Japan has replaced American beef from other sources such as Australia, or even other meats, Peel said.

The U.S. industry will have to rebuild the market, said Scott Dewald, executive vice president of the Oklahoma Cattlemen’s Association. In the long term, cattlemen in Oklahoma and elsewhere will benefit, he said.

“We would love to have what used to be our No. 1 market back,” Dewald said, “We’ve been out of the market for quite some time. I do know that the United States Beef Export Federation, which is a private organization, will be launching a major advertising campaign to the Japanese consumers to try to get that market restarted.

“We’ve got to get the consumers in that country back to buying our product.”

Cyrill cattle producer Don Boggs described the announcement as “big” for the U.S. industry. Not only will it add the Japanese market back for U.S. producers, but other countries should follow its lead, he said.

“I think it’s a positive,” he said. “You add all those together it’s going to be big for us. All we have to is get our beef in there and it will sell itself.”

Japanese audit teams are expected to arrive in the United States this weekend and conclude their work by July 21. Beef trade is expected to resume upon completion of the audits, Secretary of Agriculture Mike Johanns said.

Despite the Japanese ban and subsequent cases of mad cow disease discovered in the United States, cattle prices in this country have remained strong in the interim.

U.S. producers can thank the so-called cattle market cycle — supply and demand — for that good news, Peel said. Markets weren’t flooded with cattle ready for slaughter because producers were still building their herds, he said.

“Fortunately, we were in a position that really was driven by the supply side, the normal production cycle in the U.S. industry,” Peel said. “We’ve had strong markets; they would have been stronger if we had had those (foreign) markets. Certainly it wasn’t as devastating to lose them at the time we did than it would have been at some other point in time.”

Another factor that will come into play for Oklahoma producers is weather, Peel said. Drought conditions could force some producers to sell portions of their herds that can’t be supported on poor pasture.

At the Oklahoma National Stockyards in Oklahoma City, the market is definitely at the mercy of the weather, said Rob Fisher, president.

“All I know is the market locally, statewide, is just driven by the weather,” he said. “This hot dry weather has caused some problem. But we got some rain last week, and this Monday our cattle (prices) were higher.”

About 10,000 head traded at the Oklahoma National Stockyards this week, and prices were up about $3 to $5 per hundred pounds of live weight, Fisher said.

In Wednesday’s futures trading on the Chicago Mercantile Exchange, prices were generally higher, with August contracts for live cattle closing at $83.25 per hundredweight, up 5 cents.

Contributing: The Associated Press

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