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U.S. ranchers happy to see added foreign market"We're going to have to depend on these export markets to get through these tough times," said John Means of Van Horn, president of the Fort Worth-based Texas and Southwestern Cattle Raisers Association, whose 15,000 members produce 3.7 million cattle. LUBBOCK, Texas (AP)--U.S. cattle producers facing skyrocketing costs and stagnant domestic demand say they need overseas markets like South Korea in order to avoid substantial dips in their bottom lines. The U.S. in mid-June reached an agreement with South Korea that allows American beef from cattle younger than 30 months to be sent to the Asian country. An April agreement that permitted beef from older cattle stirred thousands of Koreans to protest, forcing officials to renegotiate the trade pact. Before reacting to the first U.S. case of bovine spongiform encepahlopathy by banning its beef in 2003, South Korea was the third-largest export customer with $815 million in sales. Officials with cattle groups indicate a larger middle class in South Korea could push that value to close to $1 billion. Ranchers are likely to rely on the impending South Korean deal and other emerging markets to offset soaring costs for feed and fuel that have led to sales losses of $70 to $100 per head. "We're going to have to depend on these export markets to get through these tough times," said John Means of Van Horn, president of the Fort Worth-based Texas and Southwestern Cattle Raisers Association, whose 15,000 members produce 3.7 million cattle. About 96 percent of the potential consumer markets for U.S. beef are outside of America, where a weak dollar is also hurting ranchers, Means said. "It's a tremendous opportunity we have, and we have to seize the moment," he said. "We're really looking forward to getting this wrapped up and providing them our nutritious and safe product." The deal includes U.S. officials certifying the age of the beef and a prohibition on cattle parts Koreans fear carry BSE, such as eyes, brains and spinal cords. Younger cattle are considered less susceptible to BSE, a fatal brain ailment that can be transmitted to humans. American producers get more for beef headed to export markets, anywhere from $30 to $60 more per carcass, said Dick Sherron, past president of the cattle raisers association. With the rising cost of doing business, "anything we can do to enhance the value of the carcass is going to help offset those costs," Sherron said. But U.S. beef won't make its way to South Korea until import rules are officially published, said John Harrington, a livestock analyst with DTN, which tracks agriculture markets. "We can't even get them to say when they're going to do that," he said of the agreement that permits boneless and bone-in cuts from bovines considered less at risk for BSE. "We hope it's a matter of weeks and not months." Meanwhile, ranchers in Texas, the nation's leading cattle-raising state, and across the country are putting their animals out to graze rather than taking them to feedlots because of the high cost of corn. That, livestock analysts say, could lead to higher beef prices for consumers in the short term. On June 1 there were 4 percent fewer cows in feedlots (6 percent fewer in Texas) compared to a year ago. The number of cattle in U.S. feedlots on June 1 was the lowest in two years, according to the most recent report from the U.S. Department of Agriculture. In Texas, the June 1 inventory was the lowest since 1999. Higher food and fuel costs for consumers have led to "stagnant domestic demand" for beef, especially higher-priced cuts such as rib-eye and T-bone steaks, said John Welch, who manages up to 10,000 head of cattle on Spade Ranches across West Texas. At the same time, the economies of other countries, including Russia, China and India, are booming and moving people formerly in poverty to the middle classes, he said. "And one of the first things they want is a piece of beef steak instead of goat," Welch said. The U.S. might have been able to parlay the now-defunct April agreement with South Korea into a revised trade pact with Japan, which now accepts U.S. beef from animals under 20 months, Harrington said. "We can certainly live with under 30 months," he said of the South Korea deal. "That's the good news. The bad news is we were expecting them to accept animals of all ages. That would have been the best of all possible deals." South Korea banned U.S. beef after a Canadian-born cow in Washington state was found to have BSE. Restricted imports resumed in April 2007 but were put on hold six months later when a shipment contained animal parts that had been banned over BSE concerns. The World Organization for Animal Health determined last year that the U.S. was a "controlled risk nation," a category that means countries can export beef regardless of the animal's age--adding to pressure on Seoul to lift its import ban. 7/7/08 Date: 7/2/08 Advertisement
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