While the earthquake, tsunami and radiation leaking from Japan’s Fukushima nuclear reactor are “still a tragedy that unfolds with new chapters every day,” Japan continues to be a growing market for U.S. beef, says Phil Seng, president and CEO of the U.S. Meat Export Federation (USMEF).
“Through April 14, we were up 93% over 2010,” Seng says. In the first two months of 2011, U.S. beef exports were up 75% over the same period in 2010. USMEF projects U.S. beef exports to Japan will total 153,000 metric tons, up 25% over last year.
Seng says there are several reasons for the surge in beef exports to Japan. One is simply a growing demand for high-quality beef. The other is a response by the Japanese trade to rising costs globally, particularly transportation costs. “So they have an interest in buying product now because they think it’s going to be cheaper than (a few) months from now.”
The human tragedy in Japan can’t be overstated and continues to affect the island nation both economically and psychologically. But Japan was turning the corner in terms of U.S. beef even prior to the disaster in March. If anything, Seng predicts it will spur even more interest in U.S. beef.
About 12% of Japan’s beef production came from the region affected by the earthquake, tsunami and radiation leakage, he says, along with 16% of the pork, 20% of the poultry and 17% of the dairy production. Most of that production went to the greater Tokyo region, which accounts for about 40% of Japan’s GDP.
“So this product not flowing into the greater Tokyo area leaves two choices,” Seng says. “Make it up with increased production in Japan, which seems quite unlikely, or compensate with increased imports. We see imports being a much stronger possibility.”
That opens the possibility that Japan may budge on its insistence that beef imported from the U.S. comes from cattle 20 months of age or less. Seng says the nuclear reactor is Japan’s most clear and present danger. Once that’s taken care of, he fully expects the U.S. to engage Japan in talks about beef. He thinks those discussions could begin as early as late June.
U.S. relief efforts, both through the military, which Seng described as “unbelievable,” and the work USMEF has done to provide food for those displaced from the region as well as those still there, are deeply appreciated. Seng is hopeful the goodwill those efforts engendered will weigh on the discussions, both in terms of easing the 20-month rule and the 38.5% duty currently applied to U.S. beef entering Japan.
However, the radiation leakage will only spur Japanese consumers’ already-heightened concern about food safety, which may have long-term implications for U.S. cattlemen. Seng says the traceability factor has become a much more urgent concern in Japan.
“Japanese consumers really do want to know where their food is produced,” he says. “And I think this is going to play more so as far as product coming in. That’s going to be an increasing, rather than a decreasing, trend,” he predicts.
But overall, he’s bullish on the Japanese economy and the prospects for increased beef exports, not only to Japan but throughout Asia. “I’m very bullish as far as the outlook in Asia. Should we have some meaningful access as far as these negotiations (with the Japanese), it could be very exciting for beef producers.”