Market forces prevail

By Seymour Klierly

The market forces of demand and supply will ultimately prevail and that economic fact was clearly demonstrated with the first shipment of U.S. beef to Japan flying off the Costco shelves. In a matter of hours, all 5.1 metric tons of U.S. beef were purchased by Japanese consumers. The invisible hand must have guided Japanese soccer moms to the grocery store.

The U.S. Meat Export Federation had a lot to do with the smooth re-entry into the Japanese supermarkets with the "We Care" initiative to show consumers that U.S. beef products are safe. And given factual information, Japanese consumers are able to make an educated decision on the safety and value of U.S. beef. Further, Japanese Prime Minister Junichiro Koizumi obviously agrees as seen by his comments regarding the lifting of the ban: "As imports have been resumed after sufficient safety considerations, it is now up to consumers to decide" whether to buy U.S. beef. The overwhelmingly positive response is a step in the right direction in resuming pre-2003 trade levels that accounted for $1.4 billion in beef exports to Japan.

While the obvious demand should demonstrate to the Japanese government that U.S. beef is safe, some barriers to the steady resumption of trade remain. Restoring the credibility of the safety of U.S. beef with the Japanese consumer remains an ongoing challenge. At the least, the high demand should deter against further threats of reactionary behavior which injects instability in the market, but does nothing to enhance consumer safety. And hopefully, the empty shelves of U.S. beef and our system of interlocking safeguards will help to tone down the Minister of Health's rhetoric about closing down the border again should a mistaken shipment happen.

In the meantime, the U.S. Department of Agriculture and our trade negotiators still have their work cut out for them. There has yet to be a formal agreement on how to address potential noncompliant shipments. Just days after the announcement of Japan reopening the market to U.S. beef, Japanese government officials claimed they would shut down the entire line of trade again should a mistake be discovered. This standard of perfection is near impossible to maintain. Without reasonable methods of correction that does not completely disrupt trade, U.S. cattlemen and processors remain vulnerable.

Date: 8/23/06

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