Even though U.S. beef doesn’t have a large presence in Europe, the fact that it’s on restaurant menus and in grocery stores is important. “Sales of U.S. beef in the EU, in both the restaurant and retail sectors, is seen across the world as an endorsement of the quality, consistency and safety of our product,” says Yuri Barutkin, U.S. Meat Export Federation (USMEF) representative in Europe. “That image pays dividends for U.S. beef elsewhere around the globe.”

Helping to enhance that image, U.S. beef was featured prominently at Anuga, a biennial event that is considered the world’s largest food show, attracting 165,000 visitors to Cologne, Germany, in early October. Nearly 7,500 exhibitors participated, including the USMEF and 12 of its member companies. USMEF’s participation in Anuga was supported by the USDA Market Access Program.

According to Barutkin, discussions at Anuga resulted in many promotional plans and projects for the coming year – with both existing customers and new contacts. Barutkin has spearheaded a number of U.S. beef promotions in Europe this year, including seminars designed to enhance interest in alternative cuts from the round and the shoulder clod.

“Higher-end middle meats are quite popular in this market, but with the EU’s demanding import requirements, it is important to develop outlets for as much of the carcass as possible,” he said. “That’s why USMEF’s educational seminars, which make foodservice and retail professionals aware of more cuts that will appeal to European customers, are so essential.”

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Discussions with European importers and distributors at Anuga revealed that demand for U.S. beef remains high, but availability is limited by the growth in imports from other supplying countries under the European Union’s duty-free high-quality beef quota.

In 1999, the World Trade Organization (WTO) ruled that the EU’s ban on beef produced with synthetic growth hormones had no scientific basis and authorized the U.S. to impose retaliatory duties on certain products imported from the EU unless the ban was lifted. Ten years later, the U.S. and the EU agreed to replace U.S. retaliation with a 45,000 mt duty-free quota for beef that met a very strict product definition. The EU agreed to limit imports to countries that it determined had controls in place to ensure that beef shipped under the quota met this definition.

“Since it was clear that the EU was not going to lift its hormone ban, replacing the retaliatory duties – which did not benefit the U.S. beef industry – with a duty-free quota was viewed as a way of creating an important new opportunity for U.S. beef in one of the world’s highest-value markets,” explains Thad Lively, USMEF senior vice president for trade access.

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The EU sought to include in the 2009 agreement a provision for resolving the hormone dispute in the WTO. The beef industry took the position that as long as the hormone ban remains on the EU’s books, it will not be possible to resolve the dispute.

This has continued to be the U.S. industry’s position, but recently Canada, as part of its bilateral trade agreement with the EU, took the opposite view and notified the WTO that it was giving up its rights to compensation in the hormone case, even though the EU has taken no action to come into compliance with the WTO’s 1999 ruling.

Prior to the 2009 agreement, U.S. beef entering the EU was subject to a 20% duty, making it uncompetitive except in a tiny niche at the very top of the market. The duty-free quota opened up a wider range of opportunities by somewhat offsetting the higher cost of producing beef from hormone-free cattle.

In the early going, the quota was an effective tool for U.S. exporters looking to gain a foothold in Europe and develop business over time. But then the EU expanded the list of countries that are eligible to supply beef under the quota to include not only the U.S. and Canada, the two countries that brought the original complaint against the hormone ban in the WTO, but also Australia, New Zealand, Uruguay and Argentina.

In the past few years, the quota has been completely filled, but beef from the other supplying countries has accounted for the majority of the business, leaving the U.S. with a small and shrinking share of the market. This situation has been compounded by the fact that the EU only makes the quota available on a quarterly basis, and the quota amount is used up well before the end of each 12-week period, creating gaps of as many as seven weeks when no beef is imported under the quota.

This uneven flow of product has created bottlenecks in the production and marketing chain and made it nearly impossible for companies to build long-term relationships with buyers who demand a consistent supply.

“This situation is becoming untenable for U.S. companies doing business in the EU,” said Lively. “We have emphasized the urgency of the situation to our government and told them that the best way to make the 2009 agreement workable is for the EU to allocate a significant share of the quota to the U.S. for our exclusive use.”

The quota was certainly a hot topic at Anuga, noted USMEF President Dan Halstrom.

“A solution is absolutely needed that will not only put an end to these current disruptions, but also allow for further expansion of U.S. beef exports to the EU,” he said.

Halstrom added that uncertainty surrounding the quota can also have a negative impact on supply, causing U.S. cattle producers to question whether hormone-free production is a viable long-term option. But the reopening of China, which was closed to U.S. beef for more than 13 years, may provide momentum for producers interested in serving both the Chinese and European markets.

“The export requirements are not identical, but both markets require hormone-free and beta agonist-free cattle production,” Halstrom said. “So if we can build demand for U.S. beef in Europe and in China, and smooth the flow of product to these markets, U.S. producers will see opportunities worth pursuing.”

Joe Schuele is vice president, communications, with the U.S. Meat Export Federation in Denver, Colo