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Japan to Ease Restrictions on U.S. Beef Japan to Ease Restrictions on U.S. Beef
(about 9 hours later)
TOKYO — Japan is set to ease a decade-old restriction on U.S. beef this week, finally allowing American ranchers and meatpackers to move past the mad cow scare and regain full access to what was once their most lucrative market. Reflecting diminishing fears over mad cow disease, Japan eased its decade-old restriction on imports of American beef on Monday. But industry experts say beef producers have many more challenges to overcome if they are going to reverse a prolonged slump that has pared the nation’s herd to its lowest level in 60 years and sent prices soaring.
A Japanese government council that oversees food and drug safety cleared a change in import regulations on Monday that would permit imports of meat from U.S. cattle aged 30 months or younger, rather than the current 20 months, according to materials distributed at the council’s meeting in Tokyo. A Japanese government council that oversees food and drug safety cleared a change in import regulations on Monday that would permit imports of meat from American cattle aged 30 months or younger, rather than the current 20 months, according to materials distributed at the council’s meeting in Tokyo.
The change is set to take effect on Feb. 1 for U.S. beef processed after that date, and shipments could start arriving in Japan in mid-February, according to the Japanese Ministry of Agriculture. Bans remain on parts of cattle considered to carry a higher risk of transmitting the disease. The change is set to take effect on Feb. 1 for American beef processed after that date, and shipments could start arriving in Japan in mid-February, according to the Japanese Ministry of Agriculture. Bans remain on parts of cattle considered to carry a higher risk of transmitting the disease.
Japan will also allow imports of meat from cows aged 30 months or younger from France and the Netherlands. Japan currently has total bans on beef imports from those countries after mad cow scares there. Japan, the world’s largest net importer of food, slapped a ban on American beef in 2003 after bovine spongiform encephalopathy, an illness more commonly known as mad cow disease, was found in a single cow in Washington State. Humans are thought to catch the disease’s fatal human variant, Creutzfeldt-Jakob disease, by eating meat, including the brain and spinal cord, from contaminated carcasses.
Japan, the world’s largest net importer of food, slapped a ban on U.S. beef in 2003 after bovine spongiform encephalopathy, an illness more commonly known as mad cow disease, was found in a single cow in Washington State. Humans are thought to catch the disease’s fatal human variant, Creutzfeldt-Jakob disease, by eating meat, including the brain and spinal cord, from contaminated carcasses.
Japan eased the ban in 2006 but only for meat from cattle 20 months or younger, an age limit American exporters said had no scientific basis. Japanese officials argued that the incidence of the disease was higher in older animals.Japan eased the ban in 2006 but only for meat from cattle 20 months or younger, an age limit American exporters said had no scientific basis. Japanese officials argued that the incidence of the disease was higher in older animals.
Japanese beef producers have found dozens of cases of mad cow disease in their cattle herds. The Japanese authorities say they test all market-bound cattle for mad cow disease. Aside from the reduction in exports, ranchers have also been grappling over the last half-dozen years or so with rising feed prices —as ethanol producers drove up the price of corn — and with drought that has parched grazing land and deprived their animals of water. The recession and changing consumer tastes contributed to the woes. While the industry has had boom and bust cycles lasting on average four to five years, the current decline is firmly entrenched.
Tokyo has demanded that U.S. meatpackers also test all export-bound cows for the disease, but the beef industry has balked at what would be a prohibitively expensive measure. Some experts also doubt the efficacy of such tests. “Previous cycles of production and prices going back 100 years related to the particular workings of the beef industry and were usually self-correcting,” said Derrell Peel, professor of agricultural economics at Oklahoma State. “But the current cycle is largely due to external factors and that is really why we are at this historic low.”
Japan’s restrictions have been painful for American exporters. In 2003, Japan was the largest market for American beef, with exports of $1.4 billion. After the ban was eased, American beef exports to Japan recovered only to about a sixth of that level. Cameron Bruett, the spokesman for one of the largest beef processors, JBS, welcomed Japan’s decision, saying it would help increase business certainty and reduce complexity for the company’s beef production, which operates in Brazil, Argentina, Canada and the United States. “While the declining herd remains a challenge for the industry, any time you increase access to additional consumers that benefits the whole supply chain,” Mr. Bruett said.
The U.S. beef industry has long urged the American government to do more to urge Japan to relax its restrictions. In 2010, President Barack Obama sent Tom Vilsack, the agriculture secretary, to Tokyo to press the government to accept incremental steps to revive the beef trade, including gradually raising its age restriction. JBS has eight processing facilities in the United States and Canada. While another major producer, Cargill, announced plans two weeks ago to close a plant in Texas — one of 10 it has in the United States — Mr. Bruett said JBS has no closure plans.
Japan started discussing easing the age limit in late 2011. The move cleared its final hurdle Monday, when the food and drug safety council agreed with a government-appointed expert panel that the measure “posed little or no risk” to public health. Japan’s decision will mark a bright spot at the annual gathering next week in Tampa of what Chandler Keys, a beef industry consultant, calls “the hat and boots crowd,” or the members of the National Cattlemen’s Beef Association. 
“It should be a shot in the arm to the market, which will be helpful,” said Bob McCan, a rancher who will be named the association’s president-elect at that meeting. Mr. McCann and his family operate a ranch in Victoria, Tex., with more than 3,600 head of Braford cattle, down from 5,000 six years ago. “Everyone looks at the high price of beef and says we must be making money, “ he said. “But profitability is more difficult due to the drought that started in Texas, the biggest cattle producing state, almost five years ago and has since widened into the Midwest.”
That has raised the cost of production, as corn used in feed has become more scarce and animals have to rely on pumped water rather than water holes.
“The bottom line is that the beef production system we have used for the last 40 or 50 years depends heavily on the incentive of very cheap grain,” Professor Peel said. “Now we don’t have cheap grain, and we are seeing fundamentally higher production costs that I don’t think are going to go away.”
The nation’s beef cattle herd has dropped from a peak of 35.3 million head in 1996 to 29.9 million as of January 2012, and Professor Peel estimates that it will have dropped another 1.6 percent when the new figures are announced next week.
Beef production has not dropped nearly as much, in large part because cattle today are bigger. So while slaughter of animals dropped 3.3 percent in 2012, total beef production was down only 1.1 percent because of heavier carcasses, he said.
This year, he expects slaughter to drop by 5 percent.
“We’re going to take beef prices to levels we have never seen, and I don’t know how that will play out,” Professor Peel said.
Japan was the largest market for American beef in 2003, when it restricted imports after mad cow disease was found in a single cow in Washington State. That animal essentially shut down the American export market in its infancy, as some two dozen other countries followed Japan’s lead.
Suddenly, “the export market that Japan had helped establish was gone,” Mr. Keys said.
But while other countries have long since eased or reversed their restrictions on imports of American beef, Japan’s decision to allow imports only of beef derived from cattle 20 months or younger created a hurdle that was difficult to overcome – and costly because of the paperwork that had to accompany exports to Japan.
From January to November, the United States shipped some 143,900 metric tons of beef valued at $969.8 million to Japan, compared to exports of 375,444 metric tons with a value of $1.4 billion in 2003, according to the United States Meat Export Federation.
The United States Trade Representative’s office estimated that the changes Japan made to its import restrictions would amount to “hundreds of millions of dollars” more in exports.
Cattle futures jumped 2 percent on Monday after Japan’s decision was announced.