Summary - The strength of U.S. beef exports to its major markets in 1997 will be put to the test. Japan grapples with health concerns and a weakening yen making imported beef more expensive, South Korea works to pull out of an economic slump which is discouraging imports, and Canada copes with record beef production, which is reducing demand for imported beef . In all, we expect trade in beef in 1997 to increase about 3 percent.
Cattle inventories in 1996 in the selected countries included in this report ended the year with 1.1 billion head, up 7.5 million head from the 1995 level. China was in the lead with a 9-million head increase in inventories in 1996 for a total 132 million head. Government policies to encourage cattle production and hold down grain consumption increases in China are working. For 1997, China's inventories are projected to increase another 5 million head. However, total inventories in 1997 are projected to decrease 4 million as the Russian Federation and Ukraine are projected to reduce inventories by about 6 million head. Both countries continue to face economic hardships and downsizing of their cattle industries.
Beef production for selected countries in 1996 increased 1 percent to 47.3 million tons. Production increases in the United States, up 1 percent, Brazil, up 4 percent, and China, up 13 percent, were partially offset by production decreases in the EU, down 4 percent, and the Russian Federation, down 7 percent. Production in 1997 is projected to increase 1 percent to 47.7 million tons as increases are expected in Brazil, China, India, and Australia. Production in the United States is projected to decrease slightly in 1997.
Beef consumption declined 1 percent in 1996 to 45.8 million tons mainly due to an 11-percent drop in EU beef consumption. Consumption was also off in Japan and the Russian Federation 5 percent and 6 percent, respectively. However, strong consumption growth in China, up 13 percent, helped to minimize the drop in the consumption estimate. Consumption was also up 2 percent in the United States. Consumption in 1997 is projected to increase 1 percent to 46.4 million tons on the strength of continued growth in demand in China and improved performance in the European Union. U.S. consumption is projected to decrease slightly in 1997 to 11.87 million tons.
The impact of BSE in the UK and E.coli in Japan was reflected in the beef trade estimates for 1996 which decreased 2 percent. However, U.S. beef exports increased 3 percent in 1996 to 849,000 tons because demand remained strong for high quality beef. Beef trade in 1997 is expected to increase as perceptions of food safety are projected to improve. Beef exports in selected countries are projected to increase 3 percent to 5.1 million tons, while imports in selected countries will increase to 4.1 million tons. U.S. exports in 1997 are projected to increase 1 percent to 860,000 tons.
The U.S. cattle situation in 1996 was dominated by the turn in the cattle cycle from one of expansion to one of liquidation. At the beginning of 1996, the total inventory stood at 103.5 million head, and by the end of this year, it may drop to 98-99 million head. Drought and high feed prices contributed to sharply reduced cattle numbers in 1996. In 1996, corn prices shot up because of a poor 1995 corn crop. Consequently, demand for feeder cattle fell off as feedlot placements dropped sharply, putting downward pressure on feeder cattle prices. As producer returns for feeder cattle dwindled, producers trimmed their herds. Drought conditions in some of the major cattle producing areas, sharply reduced forage supplies and encouraged herd reductions.
Cattle imports were down over 800,000 head from 1995 due to a nearly 1.2-million head reduction in feeder cattle from Mexico. Partially offsetting the decrease in imports from Mexico was a nearly 400,000-head increase in cattle imports from Canada. Cattle imports in 1997 are projected to increase only slightly as Mexico does not have enough feeder cattle available for large exports to the United States. Also, lower Canadian live cattle exports are expected because of increased slaughter capacity at home, although the United States will continue to import large numbers of higher graded cattle.
Increased cow slaughter in the United States contributed to an increase of 165,000 tons in beef production in 1996 to nearly 11.8 million tons. Cattle slaughter in 1997 is projected to drop about 725,000 head to 36 million head. Cow slaughter is projected to decline around 1 million head, but steer and heifer slaughter are expected to increase. Calf slaughter is also expected to be down in 1997. Beef production in 1997 is expected to be slightly lower than the 1996 level, but with more of the production coming from fed cattle slaughter.
Food safety concerns reduced world export potential in 1996, and U.S. exports declined from an earlier projection of 894,000 tons to 849,000 tons (carcass weight equivalent). Beef export volumes in the first half of 1996 were 38 percent ahead of 1995 because of strong demand from Japan, but the pace slowed in the second half. Still, U.S. exports exceeded 1995's record by about 3 percent with total exports reaching 849,000 tons (CWE), or 611,456 tons (PWE). Exports to Japan increased 1.5 percent to 336,796 tons (PWE). However, the big story in 1997 was the 92-percent increase in sales to Brazil, Hong Kong, Mexico, Saudi Arabia, Taiwan and the United Kingdom. Beef sales to these six countries increased from 43,634 tons in 1995 to 83,983 in 1996. Exports to Hong Kong and Mexico more than doubled, from 4,644 tons to 11,773 tons and 29,221 tons to 58,650 tons, respectively.
U.S. beef exports in 1997 are expected to increase about 1 percent from the 1996 level. Increased sales to Korea, Mexico and Taiwan are expected in 1997. Although very weak in early 1997, the Japanese market is expected to improve later this year. There is concern, however, that the decline in the yen relative to the U.S. dollar, which is making U.S. beef more expensive in Japan, may reduce the demand for U.S. beef in Japan, our largest market.
Imports in 1996, at 940,000 tons were 1 percent below the level in 1995. Imports in 1997 are projected to increase to 1,034,000 tons. With U.S. cow slaughter down and sales to Japan sluggish, larger supplies of manufacturing grade beef from Australia and New Zealand will be available in 1997, and much of it is expected to find a home in the relatively attractive U.S. market. Demand for frozen beef remains strong in the United States, particularly since some major fast food establishments have drastically slashed prices on their hamburgers.
Cattle inventories are down over 400,000 head since the beginning of 1996 reflecting slaughter levels not seen since 1989 and a tremendous surge in cattle exports. Slaughter levels reached 3.5 million head in 1996 mainly due to increased cow slaughter. Poor weather in early 1996, high feed grain prices, and lower beef prices prompted increased cow slaughter in 1996 and increased beef production. These conditions also prompted a large sell-off of beef cows. Canadian cattle exports jumped 33 percent to a record 1.5 million head in 1996, with almost all of them going to the United States. With a shortage of higher-grade cattle in the U.S. market, most of those imported were fed cattle being shipped to the United States for immediate slaughter.
Slaughter rates are expected to continue high in 1997, approaching nearly 4.0 million head. Increased slaughter capacity in Canada should have a dampening effect on live cattle exports. Overall, cattle exports in 1997 are projected to decrease by 310,000 head to 1.25 million head.
Not since 1986 has beef production exceeded 1.0 million tons in Canada. In 1986, beef production reached 1.035 tons; in 1996, production hit 1.015 million tons. Beef production in 1997 is projected to be a record 1.13 million tons due to large numbers of cattle placed on feed during the final quarter of 1996. 1996 also marked the first time that beef production exceeded consumption in Canada, a pattern which is expected to follow into 1997. The excess production can only mean more aggressive exports in 1997.
Beef exports also reached record levels in 1996. Record beef supplies combined with no increase in domestic beef consumption, and a stated aggressive export goal, pushed exports up 28 percent to 280,000 tons. For the same reasons, exports are projected to exceed the previous record by 60,000 tons and reach a total of 340,000 tons in 1997. Record production also reduced import demand in 1996. Imports reached 238,000 tons, down from 256,000 in 1995 and 286,000 in 1994. As expected, imports in 1997 will also decline as production is projected to reach another record while consumption is projected to increase only 3 percent. Imports for 1997 are expected to only reach 210,000 tons, a 12-percent decrease from 1996. Over 90 percent of Canada's cattle and beef exports go to the United States. Canada has also increased beef exports to Japan and South Korea. In 1995, exports to Japan increased 35 percent to 6,000 tons, and 27 percent to South Korea to 2,000 tons. Over 50 percent of Canada's imported beef comes from the United States. The other two major suppliers to Canada are Australia and New Zealand.
Cattle inventories in 1997 will continue to reflect the affects of the drought these past few years in Mexico which ravaged pasture conditions and reduced supplies. Inventories, which began 1996 with 28.1 million head, will drop to 25.2 million by the end of 1997. The reduction in inventories also reversed the direction of cattle exports in 1996, from 1.65 million head in 1995 to 460,000. However, the export picture is expected to improve in 1997 with exports projected to increase to 750,000 head as U.S. prices have already risen markedly. The calf crop also continues to decline, from 8.9 million in 1995 to 8.0 million in 1997.
Cattle imports increased in 1996 to over 115,000 head due to low domestic supplies. Slaughter cattle imports in 1997 will not increase, as U.S. slaughter cow prices have strengthened. Slaughter rates will be slightly higher at 8.2 million head.
Beef production in 1996 remained at 1.8 million tons and is not expected to change in 1997. An improving economy is expected to have a positive impact on consumption, which is projected to rise to nearly 1.9 million tons in 1997. The increased demand will be met through an increase in beef imports which are projected to rise from 60,000 tons in 1996 to 93,000 in 1997.
U.S. beef and cattle exports to Mexico in 1996 improved drastically over 1995 levels, nearing the high levels attained in 1994. Beef exports doubled, reaching 58,650 tons, while cattle exports increased from 14,641 head in 1995 to 115,249 head in 1996. This compares with 72,341 tons and 128,636 head exported in 1994. U.S. exports in 1997 should also increase to Mexico in line with the projected increase in beef and cattle imports.
The Argentine cattle inventory will continue to decline in 1997. At 51.3 million head, inventories are expected to be over 10 percent below cattle numbers in 1986 and 1 percent below 1996. The recent decline in inventories can be attributed to two years of drought which affected the calf crop in 1996. The gradual decrease over time is due to a switch to reportedly more profitable dairy and cropping enterprises. Total slaughter levels remained at 12.5 million head in 1996. However, cow slaughter was reduced 500,000 head, while calf slaughter was raised 400,000 head, as producers tried to avoid keeping the calves through a second winter and also cater to the demand for younger, tender beef in Buenos Aires. Total slaughter in 1997 is projected to decrease 500,000 head to 12.0 million as pasture conditions are expected to improve in 1997. The beef production estimate for 1997 is slightly below 1996 at 2.5 million tons. Beef consumption is also expected to decline in 1997 to 2.0 million tons because of reduced supplies.
Although down from a record high of 520,000 tons in 1995, Argentine beef exports are projected to increase from 1996 to reach 480,000 tons in 1997. Argentina made inroads into new markets such as Russia, Puerto Rico, South Africa, and Poland, which partially offset export declines to the EU, Switzerland, Hong Kong, Canada, Brazil, and the United States. Exports to Europe declined because of the BSE crisis, while large domestic beef supplies explained decreased exports to Canada and the United States. Chile, remains a major market for Argentine beef due to its close proximity and growing economy. Russia, once a major market for Argentine beef , is again purchasing Argentine beef, and has even purchased a local slaughter plant, indicating increased shipments to Russia.
Argentina has been pushing hard to export fresh beef to the United States to access its 20,000 metric ton quota negotiated under the GATT Uruguay Round. The United States is currently reviewing special rulemaking to allow Argentina to ship fresh, chilled or frozen beef to the United States. Argentina has not had an outbreak of FMD since April 1994, but continues to vaccinate. Once approved, Argentina will probably export less cooked beef to the United States. The broader implication of this measure is that Argentina is expected to be eligible to export beef to other FMD-free markets which have like sanitary regulations as the United States.
Improved incomes and competitive beef prices had a positive effect on beef consumption in Brazil. Reportedly, real beef prices declined nearly 2 percent in 1996, resulting in a 4-percent increase in beef consumption to 4.75 million tons. Consumption is expected to increase again in 1997 to 4.9 million tons for the same reasons.
Beef exports in 1996 increased 17 percent over the very weak 1995 levels but were constrained from going higher by a strong Brazilian currency. The BSE crisis also dampened demand for Brazilian beef in the EU. Exports in 1997 are projected to recover to 360,000 tons, up from 315,000 tons in 1996 and 269,000 in 1995.
Beef imports declined in 1996 to 100,000 tons as production continued its uninterrupted increase since 1992. Favorable conditions in 1996 contributed to increased beef production: weather conditions were excellent; weight gains were high; pasture conditions improved; and, investment continued in the cattle sector. Imports in 1997 are projected to decline to 80,000 tons while production continues at high levels. Beef production in 1997 is projected at 5.2 million tons, up from 5.0 million in 1996 and 4.8 million in 1995.
China's policy to support beef production is proving very successful. Cattle inventories increased 21 percent from 1994 to 137.0 million head, and slaughter numbers are up over 50 percent to 37.0 million. Beef production in 1996 reached 4.7 million tons, while consumption followed at 4.6 million. Production and consumption in 1997 are projected at 5.0 million and 4.9 million tons, respectively, a whopping 53-percent increase since 1994.
In an effort to reduce production in grain-fed animals, China instituted policies to support cattle production which could make use of pasture and hay. This move, plus increased consumer purchasing power has had a dramatic effect on beef output and consumption in China. Albeit showing significant improvement in recent years, beef production and consumption represent less than 1 percent of the total meat produced and consumed in China. As China develops, we can expect continued improvement in beef's share, which implies that imports may also increase as competition for scarce land and resources imposes limits on domestic beef production. Imports currently total only 3,000 tons but are projected to increase as beef's popularity increases.
Consumers in Hong Kong reduced beef consumption by 17 percent in 1996. Originally estimated at close to 100,000 tons, consumption dropped off to 72,000 tons. A small improvement is expected in 1997 as consumers gain confidence in the safety of the beef supply. Consumption in 1997 is projected at 78,000 tons, which is still 26-percent below that consumed in 1994.
Beef imports also dropped off in 1996, from an earlier estimate of 72,000 tons to 55,000. However, U.S. beef exports actually increased in 1996 despite the reduction in imports. While imports from Argentina, Brazil, China and New Zealand dropped off, imports from the United States more than doubled. Safety, reliable supply, high quality, and competitive prices helped to buoy the U.S. market share to higher levels. Imports in 1997 are projected to increase to 62,000 tons, with the U.S. share expected to remain strong. About 7 percent of Hong Kong's beef imports and 39 percent if its beef offal imports are re-exported, mainly to China, and this figure is not expected to change much in the near term.
Frozen boneless beef products and lower priced cow meat products in Hong Kong's wet markets gained in popularity in 1996, and represent another growing potential market for U.S. products. Despite anticipated higher prices for U.S. beef in 1997, there is a growing demand for frozen beef in Hong Kong because of its convenience. Consumers are shifting away from the old tradition of shopping daily and now prefer the added convenience of frozen products, which in 1996, comprised 83 percent of Hong Kong's total beef imports. U.S. chilled product sells for a premium in Hong Kong and is mainly sold to the HRI sector. The United States is expected to maintain its dominance in this sector as U.S. beef is perceived as high quality. However, the major growth area for the United States will come from frozen product. For example, in 1996, about 86 percent of U.S. beef exports to Hong Kong were frozen beef products.
Beef consumption in Japan marked a turning point in 1996. After two decades of growth, beef consumption decreased because consumers were concerned about the safety of the world beef supply. Household beef consumption, which accounts for about 40 percent of beef sales in Japan, declined by about 15 percent. Combined with weak food service sales, total 1996 beef consumption dropped 73,000 tons or 5 percent to 1.4 million tons.
Weak economic factors are expected to derail any significant consumption comeback in 1997. A weakening yen, making imported beef more expensive, an increase in the consumption tax from 3 to 5 percent, and a decline in domestic beef production, are projected to corral consumption levels in 1997.
Overall, imports in 1996 dropped only 3 percent to 900,000 tons. First half 1996 imports registered strong gains, with imports from the United States up 24 percent. However, from August on, beef imports dropped 25 percent when compared with the same period in 1995. By that time Japanese consumers were reeling from the impact of a deadly virus, 0-157 E.coli, which caused food poisoning and resulted in numerous fatalities and afflicted thousands. No clear cause of the E.coli outbreak was ever identified. But the infection affected consumer confidence in the safety of foreign products, including beef, and shipments dropped off. Still, U.S. exports increased to Japan in 1996, from 331,930 tons in 1995 to 336,796 tons (pwe) in 1996, as most of the decline in imports came from reduced sales of Australian beef. The outlook for 1997 indicates a slight decline in imports to 885,000 tons, but U.S. exports are expected to do well as demand remains strong for high-value U.S. beef. Also helping U.S. beef exports to Japan is the scheduled reduction in the beef tariff from 50 percent to 43.4 percent in April 1997.
U.S. exports to Korea took an unexpected twist in 1996. In October, we reported that Korea's total imports would likely exceed the yearly import quota by at least 11,000 tons due to high domestic cattle prices forcing the government to import above the quota. However, the cumulative effect of food safety concerns and a slowdown in the national economy slowed consumption and kept imports at the mandated quota level of 196,000 (CWE) tons in 1996. U.S. exports dropped 22 percent in 1996, from 90,963 tons in 1995 to 70,617 tons. The United States has typically done well in the HRI sector of Korea. However, a weakened economy, reduced consumer spending in restaurants, and consequently, the U.S. export share in 1996. Also competing for this market with the United States are Australia, Canada and New Zealand. Market shares in 1996 (January-October) were: United States, 51 percent; Australia, 30 percent; New Zealand, 16 percent; and, Canada, 3 percent.
This year, lessening food safety concerns and some recovery in the domestic economy is projected to result in double digit growth again in beef consumption and in beef imports above the mandated quota of 227,000 (CWE) tons in 1997. Imports are projected to reach 234,000 tons in 1997, a 20-percent increase over 1996. Also bolstering consumption in 1997 is a projected 91,000 head increase in domestic slaughter. Too, the Simultaneous Buy-Sell (SBS) quota amount increases to 50 percent while the mark-up on SBS decreases to 40 percent from 60 percent, resulting in more competitive prices with domestic supplies and an increase in demand.
The United States is expected to maintain its majority share in 1997 as U.S. beef does well in the HRI sector. It is this sector which accounts for over 60 percent of total beef consumed in Korea. Also, some chilled beef imports are expected to enter Korea this year, which should benefit the United States as it will probably be sold in the HRI sector. A lack of storage facilities to handle imported chilled beef currently limits the import of chilled products to very small quantities at this time.
The government is also actively promoting domestic chilled Hanwoo beef with plans to increase the stores which handle only Hanwoo beef from 550 in 1996 to 815 by 1999. Consequently, inventory levels for Hanwoo cattle continue to increase at a steady rate as record high prices in 1995 and in the beginning of 1996 encouraged farmers to increase herd size. The government policy to support Hanwoo cattle prices above 2.4 million Krw/head, by procuring cattle, will continue to keep the Hanwoo inventory at present levels. Hanwoo inventory is about 2.9 million head, and all cattle total 3.4 million. The GOK's willingness to support Hanwoo production at current levels means that even after complete liberalization in 2000, Hanwoo beef will supply nearly half of consumer demand for beef.
Consumption declined slightly to 69,000 tons as Taiwanese consumers also responded to concerns about BSE. However, consumption is projected to resume its upward trend and increase to 73,000 tons in 1997.
Beef imports continue to grow in Taiwan in line with a continuing increase in per capita beef consumption. Imports in 1997 are projected to increase to 67,000 tons, up from 63,000 in 1996. Imports have averaged 6-7 percent increases since 1986 due to rising incomes and a more westernized diet. Consumption has increased for steaks and hamburgers in Taiwan and stagnated for the traditional beef for stew using S/S/I meat (shin, shank or intercostal). And preference for chilled beef has especially become popular in Taiwan. In 1996 (January-October), chilled beef accounted for 6.5 percent of total imports, a 58-percent increase from the same period in 1995.
The trend towards chilled beef has particularly benefitted the United States; its total import share in 1996 increased to 22 percent, up from 18 percent in 1995 and 14 percent in 1994. Taiwan also grants a preferential tariff rate to Special Quality Beef (SQB), and the market for SQB steak cuts is virtually all supplied by the United States. Australia dominates the market in S/S/I cuts, and its total share has declined from 65 percent in 1994 to under 50 percent in 1996. New Zealand, the second largest supplier to Taiwan has also gained share, from 21 percent in 1994 to 28 percent in 1996. New Zealand is the leading supplier of cheaper steak cuts--non-SQB--to Taiwan.
Competition for the United States is beefing up in Taiwan as market liberalization takes hold. In its quest to accede to the World Trade Organization in July 1997, Taiwan cut the duty on Australian beef to NTD 27/kg from the current level of 30/kg. The reduction, which is pending the approval of the Legislative Yuan, will soon apply to New Zealand, meaning that the United States will face increased price competition in Taiwan. Canada also has been pushing hard to have Taiwan accept Canadian "A" or "AA" grades as SQB, but so far Taiwan has declined the request. However, Canada opened up an office in Taipei to promote its beef, and Canadian beef exports to Taiwan are projected to grow in 1997. If Canada succeeds in its bid for SQB status, the United States may have to share the SQB steak market with Canada.
1996 proved to be a year of turmoil and indecision regarding the safety of the EU beef supply. BSE--the all-too familiar term world-wide--challenged EU policy makers and strained the resources of the scientific community. The revelation in the United Kingdom that a likely link existed between BSE and the human brain disease Creutzfeld Jacob Disease (CJD), caused consumer panic and led to a massive culling of U.K. cattle in an attempt to stabilize the beef market. Older cattle--30 months and over at the end of their useful life--mainly from the United Kingdom and Ireland, were slaughtered and incinerated. In 1996, about 1.6 million cattle were eliminated in this manner. For 1997, similar numbers are expected to be eliminated as in 1996. Likewise, inventories in 1997 are projected to be down, from 83.2 million in 1996 to 82.2 million head.
The European Union lost its dominance in world trade in beef in 1996. Reduced world demand for beef in 1996 forced the EU to put its beef into intervention stocks rather than into the export market. Intervention stocks at the beginning of 1996 were 8,810 tons, but by the end of 1996, they had risen to 417,932 tons. Total EU exports dropped 486,000 tons to 2.2 million tons, with exports outside of the EU falling by 156,000 and intra-trade falling by 330,000 tons. Exports to third countries declined 17 percent from 923,000 tons to 767,000 tons. Ireland and the UK accounted for almost all of the decline.
Total imports declined from 2.1 million tons in 1995 to 1.7 million tons, and other imports declined from 374,000 tons to 343,000 tons. Since imports were banned from the UK, the major beef supplier to the EU, intra-imports also declined, from 1.7 million in 1995 to 1.4 million in 1996. Also, beef production in the EU decreased 326,000 tons in 1996, while beef consumption fell off by 830,000 tons to 6.6 million tons.
Confidence in the EU beef supply is expected to improve in 1997. Consumption is projected to rebound somewhat to 6.8 million tons which is up from 1996, but down from 7.4 million in 1995. However, EU beef exports to outside sources are still projected to decline further, from 767,000 tons in 1996 to 726,000 tons in 1997. Beef production is projected to remain nearly unchanged from 1996 at 7.5 million tons. Ending stocks are projected to increase to 1.3 million tons, from 985,000 in 1996, and 401,000 in 1995.
There will be considerable pressure on the EU to export as much as its WTO commitment allows in 1997/98, given the level of stocks. However, it will be a difficult balance to abide by its WTO export subsidy commitments and to draw down significant stock.
United Kingdom - The UK livestock sector was the most affected of any in the EU from BSE in 1996. Its beef market collapsed and it was forced to eliminate over 1.5 million head of cattle, reducing cattle inventories to 11.3 million head by the end of 1996. Beef production declined 27 percent to 712,000 tons, as consumption and trade in beef dropped off in the UK. Consumption dropped 16 percent to 820,000 tons, while the EU export ban on UK beef virtually eliminated UK beef from the market, and exports fell by 80 percent to 62,000 tons.
Recently, the UK officially requested lifting of the EU ban on exports. However, EU action is not expected soon. Therefore, exports to third countries are not expected to resume in 1997 and are projected to decline further to 10,000 tons. Consumption is expected to improve in 1997 to 880,000 tons because British consumer confidence in the safety of UK beef is projected to rise. Beef production is not expected to increase in 1997.
UK beef imports declined 16 percent in 1996 to 245,000 tons. Imports are projected to fall further in 1997 to 230,000 tons as domestic beef is expected to displace EU product. As an aside, U.S. shipments of beef to the UK more than doubled in 1996, from 587 tons in 1995 to 1,384 tons (product weight). U.S. beef in the UK is projected to do well again in 1997.
Ireland - Irish cattle numbers were up in 1996, from 6.5 million head in January 1996 to 6.8 million head due to a-79,000 head increase in the calf crop and a-145,000 head reduction in cattle exports. Earlier expectations of strong cattle prices prompted the increase in the calf crop in 1996. However, reduced demand for Irish cattle due to BSE, and particularly the Egyptian ban, lowered cattle exports to 190,000 head. Ireland has sought to negotiate with Egypt to lift the ban, its major cattle market, but Cairo remains steadfast. The continued ban means that cattle exports in 1997 will be reduced further to 170,000 head, while inventories are expected to increase further to 6.9 million head.
Reduced cattle exports in 1996 pushed slaughtering up to 1.6 million head, from 1.5 million in 1995. However, the strength of the domestic market helped to alleviate excessive stock building in 1996. Beef remains the favorite meat with Irish consumers. Thus consumption of beef declined only slightly in 1996 to 55,000 tons. The increase in slaughtering pushed beef production up 50,000 tons to 530,000 tons, and stocks up 60,000 tons to 139,000. The outlook for 1997 is for beef stocks to rise to 227,000 tons as slaughtering are projected to increase to nearly 1.8 million head. Again for 1997, increased cattle inventories and reduced cattle export potential are pressuring the slaughter numbers upward.
Irish beef exports, although down 129,000 tons from the 1995 level, were still strong at 420,000 tons because of strong demand from the Russian Federation for manufactured-grade beef. Exports for 1997 are projected up slightly to 430,000 tons. However, Irish beef faces some daunting challenges in 1997. More cases of BSE were detected in 1997, bringing the total to about 200 which has resulted in a beef import ban from Italy, significantly reduced sales to Germany, and a partial ban on beef from eight counties in Ireland from the Russian Federation.
France - France continued its 20-year trend of reducing beef consumption in 1996, with the rate of decline jumping to 9 percent in 1996 because of the attention beef safety questions attracted last year. While consumption of beef declined to 1.5 million tons, poultry and other meats, and fish consumption increased significantly.
Like consumers the world over, French consumers responded to the BSE situation by choosing domestic beef over imported product. As a result, French beef imports in 1996 dropped 34 percent to 289,000 tons, more than double the drop in domestic consumption. The deficit in demand was made up in reduced exports, as French beef exports in 1996 declined 16 percent to 417,000 tons.
French cattle inventories and slaughter levels in 1996 remained relatively stable at 20.7 million head and 5.9 million, respectively. However cattle trade dropped significantly, particularly with the UK. Total cattle imports dropped by 179,000 head due mainly to an 80-percent drop in cattle imports from the UK, France's leading supplier of cattle. Since March of 1996, France has banned cattle imports from the UK. French cattle exports were down 2 percent to 1.7 million head as other EU states reduced purchases. Exports in 1997 are not expected to change from the 1996 level, while imports are projected up at 280,000 head, which is still 37 percent lower than the 1995 level. Slaughter levels are projected to drop to 5.7 million, leaving inventories slightly changed at 20.6 million head.
Cattle inventories continued their precipitous decline in 1997. Since 1991, inventories have declined by 21 million head and now total 36,000 million. Likewise, production continues to decline in line with decreased inventories. Beef production in 1997 is projected at 2.4 million tons, down from 2.5 million in 1996 and 2.7 million in 1995.
Real incomes continue to decrease in the Russian Federation. Thus meat purchases continue to decrease. Consumption in 1997 is projected to decrease to around 3.0 million tons, a-5 percent decrease from last year and a 40-percent decrease from 1991 levels.
However, imports continue to increase to offset some of the shortfall in production. Imports in 1997 are projected to increase by 3 percent to 670,00 tons. This represents a slower rate of increase than in past years as demand overall for beef has declined as real incomes have declined. Still, imports as a percentage of consumption is increasing, from 11 percent in 1993 to 20 percent in 1996, and 22 percent projected for 1997. Ireland and Germany were major suppliers of beef to the Russian Federation in 1996, with a 19-percent share. The Ukraine was the major supplier with over a 40-percent share. The United States has less than a 1-percent share in this market.
Cattle numbers increased in 1996 to 26.75 million head as improved seasonal conditions increased restocker demand. Inventories in 1997 are projected to increase to 27.6 million head due mainly to improved forage conditions and cattle carried to heavier weights.
Cattle exports in 1996 reached an estimated 710,000 head, up 200,000 head from 1995. Live cattle exports are expected to show strong growth in 1997 as Indonesia continues to increase its demand for live feeder cattle. Exports in 1997 are projected at 880,000 head.
Beef production in 1997 is projected to increase 3 percent to 1.7 million tons, reflecting increased slaughter weights. However, domestic consumption is projected to decrease again, going from 650,000 tons in 1995 to 620,000 in 1997. Beef consumption is declining because consumers are reportedly substituting lower priced meats for beef.
Exports of Australian beef in 1996 met increased competition, which reduced overall exports by 5 percent to 1.0 million tons. Exports to the United States decreased nearly 19 percent to 181,728 tons because of an oversupplied U.S. market. Sales to Japan decreased over 10 percent which allowed the United States to claim a majority share of the Japanese market for the first time in 1996. However, Australia did well in the Korean market in 1996, despite an overall reduction in Korea's beef imports. Shipments to Korea totaled 57,601 tons, a 42-percent share, compared with a 35-percent share in 1995. Apparently, Australia was able to capture a majority share of the Livestock Products Marketing Organization tenders in 1996. Beef exports are projected to increase by 6 percent in 1997 to 1.1 million tons as demand for Australian beef is expected to increase in Japan, South Korea, Taiwan and the United States.
The recent outbreak of Anthrax in Victoria is not expected to affect Australia's beef supply. Anthrax, a bacterial infection which causes rapid death in cattle from eating contaminated soil or feed, was thought to be triggered by unusually hot and dry weather in Victoria. Through February, 190 cattle died from the disease and 66,500 cattle were vaccinated.
New Zealand's beef herd continues to decrease while its dairy herd increases. Beef cattle in 1996 declined 3.7 percent to 4.9 million head and are expected to fall to 4.8 million head in 1997. Conversely, dairy numbers increased 3.4 percent to 4.2 million in 1996 and are expected to increase to nearly 4.4 million in 1997. Reportedly, lower returns to beef is driving the beef herd reduction.
Slaughter increased to 8.9 million head in 1996 due to the increased slaughter of adult cattle from a build-up of the herd in previous years. Thus, beef production reached 631,000 tons, the same level of 1995. Total slaughter will increase in 1997 but beef slaughtering will be down because of fewer dairy calves being kept for beef. Likewise, beef production is projected to decrease to 610,000 tons in 1997.
Beef consumption increased to 117,000 tons in 1996. Advertising and lower beef prices prompted a 10.5-percent increase in per capita beef consumption to 38kg per capita in 1996, while lamb consumption declined. Consumption in 1997 is projected to remain at about unchanged from 1996.
Exports were up 4 percent in 1996 to 520,000 tons, despite decreased exports to its major markets, the United States, Japan and Korea, where exports decreased 10 percent, 6 percent, and 20 percent, respectively. The reduction was made up in increased exports to Canada, Singapore, Australia, and Malaysia. Exports in 1997 are projected to decrease slightly to 515,000 tons in light of reduced production prospects.