THE United States may currently only export around 12 per cent of its beef production but it certainly feels the repercussions of negative market access events, according to agriculture economist Professor Ted Schroeder.
The Director of the Centre for Risk Management Education and Research at Kansas State University, Prof Schroeder’s work focuses on improving commodity market efficiency.
He was a keynote speaker at the Australian Meat Processor Corporation’s conference, The Vital Ingredient, held in Sydney recently.
The impact of the US mad cow disease incident added up to a $4b loss to the beef industry in 2004 alone, following the loss of valuable export markets, he said.
“We know it wasn’t as harsh on us as it would be for others for whom exports make up a larger percentage of production but it wasn’t insignificant,” Prof Schroeder said.
“What is most notable is how long it took to recover.
“We had a total of three BSE (bovine spongiform encephalopathy) animals identified in the US, which never entered the food chain anyway, and folks, we’re still recovering.
“Only just now have we reopened China.
“Losing market access very quickly becomes a catastrophic event, especially when exports are your world. I think you all get that. Don’t ever take market access for granted.”
US beef producers were looking to make gains in export markets, realising the value in terms of underpinning the domestic cattle market, he said.
Speaking after the conference, Prof Schroeder said China was exciting to the US because of the big numbers there to be fed.
“But it is a cautionary optimism we have - relationships have long been severed,” he said.
“Our target will be high quality, we’ll play on a very small segment.”
That would be in direct competition with Australia, wouldn’t it?
“Australia, I think, will be looking to secure the high end of the middle class market emerging in China, where we will want the very high end,” he said.
“But it’s unclear how long it will take for the US to have substantial access.”
Meanwhile, Australia should be conscious of Brazil’s entry in the US.
“We are the world’s largest beef importer and you are our biggest supplier,” Prof Schroeder said.
“We use tremendous amounts of your product blended in with ours to fulfill our huge ground beef market.
“Australian beef compliments US beef and we value very heavily that opportunity to have access.”
But the doors are now starting to open to Brazilian beef that will have a similar use in the US, although it’s not arriving to open arms.
“Some of our cattle industry leadership is worried about Brazilian imports opening because of animal health issues,” Prof Schroeder said.
“But unless problems arise it will no doubt grow. You will have competition there.
“And consumers in the US don’t really spend time thinking about the origin of beef.”