Perishables - US cattlemen fighting for export markets

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Recovery from BSE crisis expected over three-year periodBy Peter A. Buxbaum, AJOTUS agricultural exports, and beef in particular, are growing robustly, according to a report issued by the Food and Agricultural Policy Research Institute (FAPRI) earlier this year, fueled primarily by the weakening dollar against most major world currencies. When it comes to beef exports, the picture is rosy, for that reason, and also because the beef exports have almost nowhere to go but up. US beef producers lost 83% of their export business after a single case of bovine spongiform encephalopathy, a.k.a. BSE or mad cow disease, was found in their herd in December 2003.
US cattlemen are working hard to regain and expand their export opportunities. In recent months they have met with Congressional leaders in an effort to pressure Japan to reopen its market to American beef, closed due to BSE. They have also testified before Congress to push for passage of the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR), which they consider to be a major potential boon to their business. CAFTA-DR includes the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.
According to the FAPRI report, the loss of major beef export markets in the wake of the mad cow case dropped the US share of the total meat trade to a record low. But because the US took quick measures to restore consumer confidence in the safety of US beef, FAPRI expects beef markets to begin to open up again this year.
Historically, the United States has been the world’s top provider of high-quality, grain-fed beef, according to the National Cattlemen’s Beef Association, a trade organization headquartered in Centennial, Colorado. The association calculates that trade surpluses in beef and beef products contributed significantly to higher prices received by cattle producers. Cattle industry economists estimate that, before BSE hit, international trade added $175 to the value of a finished steer. The mad cow revelation in December 2003 put a definite dent in the industry’s profits. Sixty percent of world markets are still closed to US beef as a result of this one BSE disclosure.
But the NCBA is not taking the closure of export markets lying down. In March, organization members, together with a delegation of sympathetic members of Congress, met on Capitol Hill with Japanese Ambassador Ryozo Kato, to complain about the continued closure of the Japanese market and the loss to the US cattle industry since December 2003 of an estimated $2 billion in sales. The Japan government entered an agreement in October 2004 to re-open its country to US beef, according to the NCBA, and the association wants Japan to start honoring that agreement or face retaliatory economic sanctions.
“We’ve been patient throughout this lengthy process of technical discussions,” said Jim McAdams, a Texas cattleman and president of the National Cattlemen’s Beef Association. “But we need to see immediate movement from Japan. It’s long overdue.” The NCBA has been asking the Bush Administration and Congress to make the re-opening of the Japanese export market, as well as the re-opening of other key US beef export markets, a top trade priority since late 2003, according to McAdams.
CAFTA to correct long-standing inequity in beef trade policy
The FAPRI report indicates a gradual easing of export restrictions and expects beef exports to reach pre-BSE levels by 2008. Around that same time, the depreciation of the US dollar against world currencies will come to an end, according to FAPRI projections, resulting in a loss of competitiveness to Latin American countries. For that reason, as well as the continued weakness of other beef export markets, the NCBA sees the interim period as an opportune time for the US cattle industry to deepen its involvement in Latin American markets.
The association has been devoting a great deal of energy towards passage of CAFTA-DR. In April Bruce Hafenfeld, a rancher from Weld

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Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly. He was educated at Columbia University.