Cattle and Beef
In 2001, beef imports are forecast to increase for the third consecutive year. Import growth is predicted to be strongest in Korea, Russia, and North America. Beef exports from Brazil, New Zealand, and Canada are forecast to rise in 2001, while exports from the United States and Australia are forecast to decrease due to herd rebuilding and lower beef production.
Note: All volumes in the following article and in the beef tables are in carcass weight equivalent.
In 2001, beef exports for select countries are forecast at 5.81 million tons, nearly unchanged from the 2000 estimate as anticipated gains in Canada, Brazil, Argentina, and New Zealand are offset by declines in the United States, the European Union, and Uruguay. Continued growth is forecast on the demand side in 2001, albeit at a slower pace than estimated in 2000. Major importers, with the exception of Japan, continue to exhibit strong economic growth and increased consumer demand. Beef imports are forecast at 4.84 million tons in 2001, up 3.5 percent from 2000, led by Korea with imports expected to increase by 27 percent.
The long-running herd liquidation in Canada and Australia appears to have turned the corner, and a slight decline in total beef production in 2001 is partly attributable to herd rebuilding efforts in these countries. Total beef production in 2001 is forecast at 49.58 million tons, compared to 49.65 million tons in 2000, with production declines in the United States, Canada, and Australia only partially offset by forecast increases in Brazil and Argentina. In 2001, total slaughter is forecast at 223.76 million head, down from 224.04 million head in 2000. The United States, Canada, and Australia are all forecast to slaughter fewer cattle in 2001.
Disease outbreaks were a major story in 2000, with Foot-and-Mouth Disease (FMD) occurrences striking Argentina, Brazil, South Korea, and Japan. While Argentina has retained the International Epizoological Organizations (OIE) certification as FMD-free without vaccination, exports of its fresh beef to the United States and certain other countries remain suspended pending reviews. Brazil has not yet regained FMD-free status for the two southern states that had obtained certification from OIE this year. Both countries continue to ship processed beef, but the FMD occurrence was a set-back to their plans to increase exports of fresh beef to the United States and other markets. Uncertainty over when shipments of fresh beef exports from Argentina and Brazil will begin will be one of the factors influencing the beef market in 2001.
In 2001, U.S. beef exports are forecast to total 1.12 million tons, down 3 percent from an estimated record 1.15 million tons in 2000. The record level will not be sustained as U.S. beef production is forecast to decline and U.S. exporters face additional competition from other suppliers. With the exception of Korea, which prepares for liberalized beef trade starting January 1, 2001, traditional U.S. markets, like Japan and Mexico, are not expected to show the same level of import growth as seen in recent years. The record level of beef exports estimated for 2000 is attributed to increased exports to Japan, Mexico, Korea, and Canada. Although exports to Mexico started the year 2000 strong, export growth slowed since the finalization of antidumping duties for U.S. beef in May.
In 2001, U.S. beef imports are forecast to total 1.38 million tons, up 1 percent from the estimated 1.37 million tons in 2000. This level of imports is over 10 percent higher than imports prior to 1999 due to the combined effect of decreasing cow slaughter in the United States and increasing demand for manufacturing grade beef.
In the second half of 2000, drought and poor pasture-range conditions forced lighter-weight cattle into feedlots. Dry pasture conditions also forced early weaning of the calf crop, and many were placed on feed given the attractive grain prices. This unusually large number of cattle on feed is expected to increase the third quarter average dressed weight of federally inspected cattle to a record 753 pounds. It has also produced a larger quantity of higher quality beef. Therefore, despite completing the fifth year of herd liquidation, total beef and veal production for 2000 is an estimated record 12.30 million tons. This record level of beef production, combined with strong demand in Mexico, Japan, and Korea, is expected to drive U.S. beef exports in 2000 to their all-time high.
In 2001, Canadas beef exports are forecast to increase 2 percent to 575,000 tons, while exports in 2000 are estimated to total 565,000 tons, an 11-percent increase over the previous year. Exports to Mexico are expected to double in 2000, making it Canadas second largest beef export market behind the United States. Exports to Mexico have strengthened in 2000, mainly because certain types of beef exported from the United States to Mexico are assessed anti-dumping duties.
In 2001, beef imports are forecast to increase 4 percent to 290,000 tons while imports in 2000 are estimated to total 280,000 tons, a 7-percent increase over the previous year. Beef from the United States will likely account for a majority of the increase, and imports from Argentina and Uruguay are expected to displace imports from Australia and New Zealand.
In 2001, the beginning cattle inventory is forecast to total 12.55 million head, a decrease of 1 percent from the previous year. However, herd expansion is expected to occur as the year progresses, marking the first increase since 1997. Cattle imports in 2000 are estimated to increase 18 percent to 275,000 head and are forecast to increase 9 percent in 2001. The United States will likely benefit from this situation since nearly all of Canadas cattle are imported from the United States.
On July 6 the Canadian Food Inspection Agency amended the Livestock and Poultry Carcass Grading Regulations to permit the application of Canadian grade names to imported beef carcasses. Beef carcass grading in Canada is voluntary, but the application of Canadian grade names to beef carcasses prior to this amendment had been restricted to cattle slaughtered in Canada.
Canada is on schedule to have a mandatory bovine tagging system in place by December 31, 2000. The amendment requires that every bovine animal be identified with an official tag before leaving the herd of origin or co-mingling with other herds. Should the proposed amendment to the Health of Animals Regulations be implemented, the effective date would be January 1, 2001, for cattle leaving the herd of origin and July 1, 2001, for all other cattle.
Imports are forecast to total 425,000 tons in 2001, a 6-percent increase over the 2000 estimate of 400,000 tons. This level of imports is nearly double the amount imported in 1998, reflecting strong and growing consumer demand. Higher incomes combined with expected economic growth will stimulate demand in 2001.
While still expanding, the pace of import growth has slowed considerably since the May 28 decision by Mexicos Commerce Secretariat to finalize anti-dumping duties on the importation of U.S. beef (boneless, bone-in, and carcasses). U.S. Census figures indicate that U.S. beef exports to Mexico from January to May 2000 increased 22 percent over the same period last year. Following the implementation of the anti-dumping duties, U.S. beef exports to Mexico for June and July 2000 only grew by 7 percent compared to June and July 1999. In addition, Mexico has begun to import more beef from Canada, which does not face anti-dumping duties.
The beginning cattle inventory for 2001 is forecast to total 22.44 million head, down 5 percent from the previous year and down 26 percent from 1995. The prolonged drought in Northern Mexico combined with cattlemen facing low profitability, overdue loans, and tight credit have been major factors for the herd liquidation. Despite contracting cattle supplies, strong U.S. demand for feeder cattle is expected to increase cattle exports 29 percent in 2000 to 1.24 million head. Cattle exports are forecast to increase an additional 4 percent in 2001 mainly due to expectations of favorable feeder cattle prices.
Despite the temporary set-back from the FMD outbreak in August, beef exports in 2001 are forecast to total 390,000 tons, up 8 percent from the 2000 estimate. Still, the outbreak slowed export growth in 2000 as producers had anticipated expanding exports of their fresh-chilled and frozen beef to Japan, Mexico, and Korea. Fresh-chilled and frozen beef exports to the United States remain on hold pending a review that will be conducted by USDAs Animal and Plant Health Inspection Service. Argentina exports considerable quantities of thermally processed beef which is not considered an FMD risk. In response to the outbreak, Argentina went through an extensive process to quarantine and test all animals that had come into contact with the infected cattle, and over 3,000 cattle were slaughtered. In response, the OIE committee for FMD and Other Diseases reinstated Argentinas FMD-free status on September 26.
In 2001, Brazils beef exports are forecast to total 675,000 tons, an 8-percent increase over the 2000 estimate and nearly twice the quantity exported in 1998. Despite outbreaks of FMD in August, beef exports are forecast to grow because Brazil exports considerable quantities of thermally processed beef.
As with Argentina, the country expanded production partly in anticipation of increased sales of fresh beef after obtaining FMD-free status from the OIE. The beginning cattle inventory for 2001 is forecast to total 150.85 million head, up 3 percent from the 2000 estimate. In addition to anticipating FMD-free status, the industry also invested in improved technologies such as crossbreeds and artificial insemination. These improvements are expected to increase the calf crop and reduce cattle death losses in 2000 and 2001. The increased herd size combined with the improved technologies will likely contribute to record beef production of 6.65 million tons in 2001.
On May 12, the OIE recognized the States of Rio Grande do Sul and Santa Catarina as FMD-free without vaccination. However, the OIE removed both States from its list of FMD-free countries in August due to FMD outbreaks occurring in Rio Grande do Sul. A suspicion of vesicular disease was also reported in the State of Santa Catarina, but laboratory examination gave negative results. It is unlikely that the OIE will review Brazils status until 2001.
Brazil announced a general state of alert for the entire country when the outbreaks first began and cattle shipments from the State of Rio Grande do Sul and Santa Catarina were restricted. Brazil also set up surveillance zones in all the surrounding municipalities where outbreaks occurred and prohibited all livestock movement into and out of these zones. Over 3,000 head of cattle were destroyed in an effort to stop the spread of the disease. However, the government did not lift the ban on FMD vaccinations in the States of Rio Grande do Sul and Santa Catarina, a move that would have prolonged this regions goal of regaining FMD-free without vaccination status.
In 2001, EU beef exports are forecast to total 600,000 tons, down 7 percent from the previous year and down 30 percent from 1999. Although Denmark is forecast to increase beef exports in 2001, decreased exports by Germany and Ireland are expected to reduce total EU beef exports. Beef export restitutions were drastically reduced in December 1999 and again in May 2000, making exports less attractive. Also, exporters no longer have cheap intervention supplies from which to draw. EU intervention stocks were reduced to zero, down from 500,000 tons at the beginning of 1999, with most product destined for Russia under the EUs food aid program.
In 2001, EU beef imports are forecast to total 364,000 tons, up 1 percent from the 2000 estimate. Beef imports continue to take place mostly within tariff quotas for a limited number of countries, although imports from Latin American countries have occurred despite paying over quota duty rates.
The EU Commission mandated a beef tracking and labeling system for all EU countries. Since September 1, member states have had to indicate on labels, down to retail level, the country of slaughter, country of cutting/deboning, the reference code of the animal, and its category. Beginning January 1, 2002, member states will also have to indicate the country of birth, fattening, and slaughter.
In 2001, Japans beef imports are forecast to total 990,000 tons, a 1-percent decrease from the record level estimated for 2000. Beef stocks will likely be drawn down in 2001 to offset the decrease in imports. Over the last few years, Japans value-conscious consumers have increasingly relied on less expensive beef cuts to increase consumption levels. Imports of low cost cuts such as chuck, clod, short plate, and barbecue-style beef have fared well. Korean barbecue and beef bowl establishments continue to be major purchasers of U.S. frozen short plate. Also, imports have been boosted by strong demand from the hotel, restaurant, and institution/home meal replacement sector.
In April and May 2000, 3 cases of FMD were confirmed in cattle in the Miyazaki Prefecture of the southern island of Kyushu, and over 700 cattle were slaughtered to contain the disease. On June 9, the quarantine restrictions that had been put in place were lifted, and on September 26, the OIE committee for FMD and Other Diseases reinstated Japans FMD-free status. Consumer reaction to the outbreak was muted because news coverage was limited to fact-based reports. Since Japan only exports a small quantity of beef, the outbreak did not have a significant impact on beef trade.
On July 1, 2000, the Japanese Agricultural Standards Law mandated that all retail stores show the country of origin on many perishable food items. This change in policy is not expected to have a major effect on U.S. beef because most retail stores are already labeling product origin.
On July 31, the World Trade Organization (WTO) Panel that examined Koreas beef import regime and domestic support program released its final report. The Panel identified a number of Koreas control measures that violate its WTO obligations. The Panel also identified a number of existing measures that are to be removed by January 2001, the date that Korea is obligated to fully liberalize its beef trade. The case was brought before the WTO because Korea failed to meet its minimum import requirement in 1998, and this brought to light a number of policies that impede trade.
Most significantly, the Panel ruled that Korea cannot have a separate retail system for imported beef. This decision will greatly increase market access for imported meat because it has been determined that it can now be sold at locations that sell domestic meat. Under the old system, there were ten times the number of stores that sold domestic meat. The Korean government has filed an appeal to the WTO, citing the separate retail system for domestic and imported beef as well as the subsidy payments made to domestic beef producers as grounds for the appeal.
In 2001, beef imports are forecast to increase 27 percent from the previous year to total 340,000 tons due to market liberalization and continued economic growth. This will allow suppliers to provide consumers a larger variety of quality beef at a lower price and will likely translate to a 7-percent increase in beef consumption for 2001. U.S. suppliers are well positioned to benefit because most Koreans prefer grain-fed beef products over Australias grass-fed beef products.
In 2001, beginning cattle inventories are forecast to total 2.10 million head, a decrease of 16 percent from the previous year. Many cattle producers are expected to decrease production in anticipation of the January 1, 2001 deadline for liberalizing Koreas beef trade.
In March and April, Korea suffered 2 outbreaks of FMD, and a total of 81 head of cattle from 15 farms tested positive to the disease. In order to contain the disease, officials slaughtered all infected animals and vaccinated over 860,000 animals. In July, the Ministry of Agriculture and Forestry removed the last FMD quarantine zone and completed the FMD vaccinations. Overall, the FMD outbreaks did not have a significant impact on beef trade and consumption.
The FMD outbreaks have heightened food safety concerns at a time when government regulators had just begun developing safeguards. In order to increase consumer confidence in domestic beef, the government plans to introduce a bar code system for Hanwoo beef that will trace the product through the retail chain. Also, in June, the government proposed to revise its animal health standards, calling for tougher salmonella standards for raw ground beef. Final standards will likely be published later this year.
In 2001, beef imports are forecast to total 99,000 tons, a 4-percent increase over the 2000 estimate. Declining pig prices in Taiwan have made domestically produced pork more competitive with imported beef and has slowed the growth of imported beef.
In the last few years, Taiwans Council of Agriculture has accepted the quarantine inspection and health certification systems of a majority of countries exporting beef to Taiwan. Previously, Taiwan depended more heavily on inspection teams to approve each manufacturing plant exporting beef to Taiwan. This change has facilitated trade for a large number of manufacturing plants and has opened the door for others who had not sought approval. According to supplier data, over 20 percent of the countrys beef imports are from the United States.
All U.S. meat and poultry exports to Taiwan must be accompanied by USDA/FSIS health certificates. A new form of the FSIS Health Certificate went into effective October 1, 2000. Information regarding the shipping port, vessel name, shipping date, container number, and seal number must be included on the new certificate. Shipments that fail to meet this requirement will risk detention or rejection.
China has successfully completed nearly all of its market-access bilateral accords with WTO member countries and is expected to become an official member in the near future. Once accession occurs, tariffs will be phased down over 4 years from 45 percent to 12 percent for beef, and from 20 percent to 12 percent for beef offal. Although tariffs would be significantly reduced over time, beef imports are not expected to increase dramatically in 2001. China is forecast to produce and consume over 5.67 million tons of beef in 2001.
In 2001, beef exports are forecast to total 1.21 million tons, nearly unchanged from the 2000 estimate. Japan remains Australias largest export market, although exports to the United States have been increasing in recent years and have narrowed the gap. Korea continues to be an important growth market for Australia. However, increasing market share has proven difficult given competition from the United States
In 2001, total cattle slaughter is forecast to total 8.28 million head, down 2 percent from the 2000 estimate of 8.43 million head and down 5 percent from the 1999 total of 8.71 million head. Because the Australian herd has passed from the liquidation phase and into the rebuilding phase, a large number of female cattle are being withheld from slaughter. Cow slaughter is estimated to decrease 11 percent in 2000.
In 2000, beef production is forecast to remain nearly unchanged at 1.95 million tons. Abundant supplies of lower priced grain combined with excellent pasture conditions have allowed for heavy slaughter weights. Beef production is forecast to decrease 2 percent in 2001 as normal seasonal conditions combine with decreased slaughter.
Cattle exports are estimated to increase 3 percent in 2000 despite decreased exports to the Philippines. For the period January to May 2000, cattle exports to the Philippines were down 13 percent, due mainly to a trade dispute involving the Philippines access to Australias banana and pineapple market. An estimated 30 percent of Australias total cattle exports are shipped to the Philippines. Exports to Indonesia are expected to compensate for decreased exports to the Philippines.
In 2001, New Zealand is expected to continue to rebuild its cattle herd following the 1997/1998 drought. The January 1, 2001 cattle inventory is forecast to total 9.8 million head, an increase of 7 percent over the previous year. Warmer than normal weather and above average rainfall have contributed to the increase. Also, favorable beef prices have provided the incentive to increase production.
In 2000, total exports are estimated to increase 10 percent over the previous year, due mainly to an estimated 14 percent increase in exports to the United States. New Zealand is on pace to fill its U.S. beef quota for the first time. New Zealands largest markets in Asia are Japan, Korea, and Taiwan, respectively. In 2000, exports to Japan are estimated to decrease 3 percent, while exports to Taiwan remain nearly unchanged. Growth in the Korean market has been slow due to competition from Australia and the United States.
In 2001, Russian beef imports are forecast to total 500,000 tons, an 11-percent increase over the 2000 estimate. As local cattle producers struggle with high feed grain prices, meat processors will likely utilize a larger percentage of imported meat. Also, the continued decline of Russias cattle herd will make the country increasingly dependent on imports in order to maintain current consumption levels. The beginning cattle inventory for 2001 is forecast to total 25.80 million head, down 4 percent from the 2000 estimate.
For further information, contact Tony Halstead, (202) 720-4185.