Japanese Want Piece of U.S. Beef Trade
Having agreed to step up imports of American beef, the Japanese are moving to get a piece of the U.S. export trade and control the quality of the beef they buy.
Japanese investors have established a foothold in the U.S. industry by buying into smaller packers like Washington Beef Inc. of Yakima, Wash., rather than giants such as ConAgra and IBP.
By entering the U.S. market, the Japanese can effectively compete for a share of the Japanese beef import market. The market was widened by Japan’s recent agreement to raise its total beef imports by 60,000 metric tons a year for the next three years and gradually dismantle import quotas.
The buyers also want to assure a steady supply of the fatter beef the Japanese prefer at a time when American tastes are tending toward leaner beef.
The more fat, the juicier the meat. But because fat contains cholesterol, the American beef industry has focused on producing leaner beef preferred by health-conscious U.S. consumers.
The industry has geared production to leaner beef, produced by cattle weighing 1,100 to 1,150 pounds. The Japanese, meanwhile, prefer fatter beef produced by grain-fed, 1,500-pound steers.
U.S. packers would have difficulty slaughtering and processing such large cattle, and the relatively small Japanese market would not encourage U.S. firms to alter beef processing standards, said Mark Gustafson of the U.S. Meat Export Federation.
By buying plants and raising cattle in the United States, the Japanese will own a greater segment of the meat production and marketing chain that will serve their market, said David Wooldridge of Austin Adair Inc., an Austin, Tex., trading firm working with potential Japanese buyers.
Gustafson and Wooldridge said the focus of the packing plant investments has been on the West Coast because it is near export channels. But Gustafson said that if Japan’s demand for U.S. beef increases, the Japanese may be forced to buy plants in high-density cattle areas of the Midwest.
Japanese interests have also extended to cattle feeding in the United States. One feedlot, Monterey County Cattle Feeders of Gonzales, Calif., opened June 1. Many of its nearly 6,000 head are Japanese-owned, said manager Roger VanHorn.
The Japanese investments in beef processing should be small and company identities may be well-guarded to allow continued cooperation with major U.S. meat packing plants, which are heavy exporters to Japan, Gustafson said.
Also, because of the excess beef processing capacity in the United States, he said the U.S. beef industry should be receptive to the Japanese entry into the market.
“In the short run it would be beneficial to cattle feeders, because it would provide another buyer,” said livestock analyst Joe Kropf of the Helming Group, in Shawnee Mission, Kan.
