Japan eases age restrictions on beef

News
Feb 1, 2013

After years of mentions and rumors, the long-awaited agreement has finally been made; Japan will import beef from animals up to 30 months old!

Monday, Jan. 28, U.S. government officials announced Japan would ease age restrictions on beef imports from the U.S. This move has been long anticipated and the possibility has circulated since 2011. As of Friday, Feb. 1, beef from animals 30 months or younger could be exported to Japan, this limit up from the prior 20-month maximum.

On Friday, Jan. 25, Japanese Ambassador Kenichiro Sasae sent a letter to U.S. Trade Representative Ron Kirk and Secretary of Agriculture Tom Vilsack informing them of the decision of the Japanese government. He called it his honor to bring the news of the new beef trade requirements to the U.S. officials and said he looked forward to working together in the future.

The Japanese letter referred to the details contained within the “Requirements for beef and beef products to be exported to Japan from the United States of America” agreement (“Requirements”). In the response letter sent from Kirk and Vilsack, they said, “We hereby also confirm the Government of the United States will implement the paragraphs of the ‘Requirements.’” The U.S. letter went on to stress the appreciation of the U.S. and the value of the trade relationship with Japan.

The 20-month age restriction for cattle destined to be beef for the Japanese market came in 2005 after Japan relented its all-out ban on U.S. beef. Japanese concerns about BSE shuttered the Japanese market to U.S. beef exports following the 2003 discovery of BSE in the U.S.

The 2003 ban was a boon to Australia, which saw its market share of Japan’s estimated 500,000-ton annual beef import market increase significantly. Since then, Japanese consumer confidence in U.S. beef has returned and the U.S. has won back a good deal of that lost market. Aggressive BSE-related safety controls on livestock feed and inspection of carcasses has had a big hand in that recovered strength in the Japanese market.

Requirements

The general requirements of the agreement include the vastly important relaxing of the age limit for cattle from 20 to 30 months. As part of this, USDA must set up an age-verification program suitable to track animal ages among those producers and facilities which produce for the Japanese market. Additionally, animals destined for beef export to Japan must be born and raised in the U.S. or imported live from a country “deemed eligible by Japan to export beef or beef products to Japan.” Canada is among those countries.

An especially important note on the general requirements of the new agreement should be noted:

“In the event of (an) additional case(s) of BSE, the current requirements set out in this document will not be modified.”

This facet of the agreement represents a welcomed element of stability regarding the future of this important trade relationship. Another detail contained in the agreement suggested the possibility of continued reductions of trade requirements.

“After a reasonable period of time from the date of implementation of these requirements… the Government of Japan will further review its import quarantine inspection and regulatory measures and consider modifications to these same measures in the event that the compliance record is satisfactory.”

Both governments have reiterated a dedication to continued cooperation and improvements of the systems involved.

Benefits of Japan

All official related U.S. agricultural groups hailed this move as a wonderful step forward and a boost to the country’s agricultural economy.

“This is great news for American ranchers and beef companies, who can now— as a result of this agreement—increase their exports of U.S. beef to their largest market for beef in Asia,” said Kirk, heralding the agreement in a public statement.

“This represents a significant and historic step in expanding U.S. beef trade with Japan and growing American exports and jobs here at home. We welcome Japan’s action.”

The National Cattleman’s Beef Association (NCBA) had similar words of praise and hope for the future of the beef export economy.

“This is great news for cattlemen and women and is a significant milestone in our trading relationship with Japan,” said NCBA President J.D. Alexander. “Japan is a great market for U.S. beef and we look forward to continuing to meet Japanese consumer demands. This move is an important step forward in paving the way toward greater export opportunities to one of our largest export markets.”

According to U.S. Meat Export Federation (US- MEF) data, Japan is currently the second-largest market for U.S. beef exports by value at $969.8 million and third-largest by volume at 143,900 metric tons (317.2 million pounds) through the first 11 months of 2012. When all of 2012’s information comes in and is analyzed, it is expected that exports to Japan will have topped $1 billion by value. If that is the case, it will be the first year since the 2003 BSE discovering in which that happened.

Numerous sources suggest the impact of the expanded beef trade opportunity to Japan this agreement represents could easily be valued in the millions.

USMEF forecasts that U.S. beef exports to Japan in 2013 as a result of expanded access to the market will increase roughly 45 percent in volume and value, reaching 225,000 metric tons (496 million pounds) and $1.5 billion.

Vilsack commented about the strength of U.S. agriculture, saying that—despite the ongoing drought—the country is seeing its most successful agricultural period in history, this being bolstered by export relationships.

“We will continue our efforts to break down barriers and expand access for highquality, safe and wholesome U.S. food and agricultural products to Japan and around the world.”

Not everyone was particularly pleased with this move towards a closer, more open beef trade relationship between the two countries, however. According to a Reuters report, the Consumers Union of Japan denounced the move last Monday, voicing concerns over “lax checks on animal feed and product shipments in the United States,” and suggested the Japanese government was underestimating the BSE risks associated with foreign beef.

In addition to the U.S., Canada and France were beneficiaries of the relaxed age restrictions.

Jim Robb of the Livestock Information Marketing Center also provided an economics-based check to the rose-colored visions of the future presented by those quoted above. He pointed out the fact many countries, including Japan and the U.S., are still feeling the effects of the recession, and the Japanese yen has been devalued compared to the dollar. With Japanese buying power down, expensive U.S. beef exports will be less attractive.

“Furthermore, wholesale beef prices will be record high in 2013 because the U.S. cattle supply is still shrinking, and those higher prices tend to reduce sales. Still, it could be a net positive in terms of U.S. beef exports to Japan in the months ahead,” Robb said.

Still, hopes are very high for the potential of this agreement and the future beyond. Both live and feeder cattle futures posted solid gains on Monday following the news, with near-term live cattle contracts closing up in the $2.50 area and near-term feeder contracts up about $2.

“This is an extremely positive development that successfully addresses one of the longest standing issues between our two governments,” said Philip Seng, USMEF president and CEO.

“The U.S. beef industry— from farmers and ranchers to exporters—will benefit from increased exports to this premium market. At the same time, the trade and consumers in Japan will see a wider variety of beef products and improved availability of U.S. beef in the retail and food service channels.

“We are grateful to the governments of Japan and the United States for their efforts to make this agreement a reality.” — Kerry Halladay, WLJ Editor

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