Tuesday, October 26, 2004

Japan last Saturday and Taiwan yesterday said they would resume purchases of American beef, setting up a process that could allow next year’s exports to return to levels not seen since a single U.S. case of mad cow disease was discovered last year.

“We’ve got a lot of work to do, a lot ahead of us. We won’t rest until everything is back to normal. Hopefully we can do that in 2005,” said Gregg Doud, chief economist at the National Cattlemen’s Beef Association.

U.S. Agriculture Secretary Ann M. Veneman in December 2003 revealed the country’s first case of mad cow disease. Formally called bovine spongiform encephalopathy, or BSE, the disease fatally attacks the central nervous system of cattle and has been linked to a chronic brain-wasting illness in humans.

Japan, South Korea, Mexico and Canada, which account for more than 90 percent of exports, and other markets immediately stopped buying U.S. beef and cattle.

The agreements with Japan, which bought $1.7 billion worth of U.S. beef in 2003, and Taiwan still face technical hurdles. The two sides still must conduct risk assessments, plant inspections and change domestic regulations before shipments can resume.

But U.S. agriculture officials said they hope trade resumes in a matter of weeks.

“Our goal is a return to normal beef trade as quickly as possible,” Miss Veneman said yesterday.

U.S. consumers did not lose their appetite for beef after the mad cow scare, and Mexico and Canada earlier this year resumed purchasing some cuts. But cattlemen, and more so meatpackers, have been squeezed because of the lost markets.

Springdale, Ark.-based Tyson Foods this past summer reported that domestic fresh beef sales increased 6.9 percent but international beef sales decreased 26.4 percent for the nine-month period ending in June. The company, the nation’s largest beef, chicken and pork processor, wrote off $61 million in mad cow-related charges.

Swift & Company, a Greeley, Colo., beef and pork processor, this month reported sale volumes for its beef were 18 percent lower during the three months ending Aug. 29 than the same period a year earlier, a decline largely attributed to lost overseas markets.

June through August 2004 “was the last strong quarter for the U.S. beef industry before BSE was identified in the U.S. late last year,” said John N. Simons, Swift’s president and chief executive officer.

Though the United States traditionally sends only about 10 percent of beef production overseas, exports accounted for about $3.8 billion in 2003, an important source of revenue for ranchers and meat processors.

The industry relies on the foreign markets to sell at relatively high prices cuts that are unpopular in the United States, such as “variety meats” liver, heart and tongue.

After the ban, those cuts were sold domestically at low prices. Retail prices for steaks and cuts traditionally popular in the United States have remained strong because of steady demand.

As international trade resumes, the variety meats will again be sent overseas.

“What it suggests is that retail prices in the U.S. should remain relatively flat,” said Mr. Doud.

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