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By David Bowser HOUSTON — "These international markets are valuable to us," says Paul Clayton with the U.S. Meat Export Federation. "We have to stay in these international markets. They are extremely valuable to our industry today." In the first 50 years of the 20th century, Clayton says, the world's population tripled. It will almost triple again in the next 50 years. By 2050, there will be nine billion people in the world," Clayton says. "There are only 3.5 billion now. That's a lot of mouths to feed." He says 95 percent of the world’s consumers live outside the United States. "What will happen is that arable land will begin to decrease," Clayton predicts, "and those countries that are most efficient in producing animal protein will be the ones who will feed that nine billion population. The United States is currently one of those countries." He says the U.S. exports billions of pounds of beef for billions of dollars annually. "That will continue to grow," Clayton insists. "We have to do that for a lot of reasons." Beef is important when it comes to animal protein, he adds. As arable land diminishes, Clayton says, there won’t be a lot of land for other countries to produce beef. "Beef provides so much versatility in consumer diets," he says. "You get zinc, iron and protein. It's a tremendous source of a very vital set of nutrients, but it also provides a lot of versatility, as beef has always done." Poultry and pork don't require much space, he notes, so a lot of countries will be able to raise their own supplies of pork and poultry because they have the land to do that, but beef is much more difficult to raise because of the space requirements. The trend worldwide is for increased per capita consumption of animal protein. "We're seeing this grow and grow and grow because of economic changes in the world," Clayton says. "Consumers have more dollars, and they're putting some of these disposable dollars into animal protein." China alone, he says, is going through a tremendous change in its economy. "They had a growth in disposable income of eight percent in 2003," Clayton says. "It is expected to be another eight percent in 2004." That is tremendous growth, Clayton says, for a country that has a third of the world's population. "These countries are going to be demanding more and more animal protein," he forecasts. In contrast, the U.S. and European markets are "mature." "We don't see a whole lot of change in consumption," Clayton explains. There has been good growth in demand in the U.S. in the last five years, but that growth has been much slower than in other countries. "Their growth has been exponential," Clayton says. "Those are the places that we need to capture." That, he says, is why international markets are so vital. "There's an opportunity," Clayton says, "a value opportunity." It is important to get back into those markets quickly, he contends. Clayton says there are a lot of items that U.S. consumers just don't eat. Many of these can be sold in export markets. He doesn't see a lot of people in the U.S. eating tripe sandwiches for lunch, for example. "We just don't consume those products," Clayton says, "but in a lot of economies, per capita consumption is going up. They have the money to purchase a few things, and those items are animal protein sources for some of the lower income consumers." Clayton says a lot of export products are in freezers in other countries, and their supplies right now might last into the summer. "It's not like a lot of these countries are doing a lot of replacement at this point in time," Clayton says. The United States, he adds, has had a tremendous growth as international supplier of these products. That growth has been at the expense of Europe's agricultural industry. "Europe has not been able to supply them," Clayton says, because of changes in their economy. "They're losing a lot of arable land to raise meat products," Clayton says. Canada had become a major supplier until the report of BSE in Alberta last May. Brazil is also becoming a major supplier of meat. "They're very efficient," Clayton says. "Their labor cost is about an eighth of what the United States’ is. They can literally get product on the market much cheaper than we can." Brazil has a problem, however, with animal disease. That limits some of their abilities, Clayton says, but by 2050, they could well be a major player in the world beef market. "We have to be cautious of those changes," he warns. All this has led to a favorable trade balance for the U.S. when it comes to beef. Clayton says the U.S. purchases imports at an average of $1.17 to $1.22 a pound. It sells beef on the international market at $1.66. "That is a beneficial trade balance," Clayton points out. The top beef products, value-wise, that the U.S. exports are the short plate, short ribs, tongue, intestine, skirt, chuck roll, liver and tripe. "This is very much a specific product market," Clayton says. "You just don't see these items in the United States." Economically, he says, these products have to be exported. "I would find it very difficult for us to put a lot of these products, long-term, into the market in the United States," Clayton says. "The ethnic markets may be a huge opportunity, but to sell 101 million pounds of tongue in an ethnic market can be a challenge for us." They could be used in other products, like processed luncheon meats, but they would have to be labeled as being part of the product. "A lot of consumers read those labels," Clayton cautions, "and if they see that word ‘tongue,’ they may not purchase it." The same is true of tripe. "We've got a lot of challenges if we're going to do that," Clayton says, "but I do think it's an effort that we need to look at in the short term." Those products add up to $1.6 billion annually, he says. "One of the most interesting things to go by out there is that if we look at various types of trade agreements that have evolved over the last few years," Clayton says, "we see that the tariff barriers that used to be in place have diminished. In other words, the cost of getting into a market has diminished." But countries with substantial agricultural industries tend to impose more sanitary and health barriers. "The United States does it," he acknowledges, "just like all other countries. It's not exclusive to anyone." Clayton says many people think only of the hormone ban in Europe, but the U.S. does some things along the same lines. "Are they really a barrier or not?" he asks. "I think that's debatable, but it's something that we impose." Clayton says those trends are going up as tariffs go down. It was sanitary and health barriers that kicked in on Dec. 23, when some 65 countries closed their borders to U.S. beef. "That happens with any country," Clayton says. He points out that BSE is a low-risk disease. It's on the "B" list of the OIE, the international animal health organization. "It's very low risk," Clayton says, "yet we still go through the shutdown." The disease is on the decline worldwide. "The first thing governments did was close the border," Clayton says. "We had three countries — Japan, Korea and China — that would not allow the pipeline product into their markets, the product that was in transit to the country as of Dec. 23. That amounted to about 88 million pounds of product or $235 million worth of product. A lot of that is still sitting at the ports." A lot of it, ironically, is owned by the importers. Those governments are causing economic problems in their own countries. "Some of these companies are going bankrupt," Clayton says, "because they can't move the product in there." But those countries can't let the product in because they have rules on their books that say that they cannot allow a product in from countries that have reported diseases like BSE. "Even though there has not been an endemic case in the United States, they're considering this a North American issue," Clayton says. He says it's important that Mexico, the U.S. and Canada all work together, because their agricultural sectors tend to be fairly well integrated. U.S. trading partners want to know what interventions have been put in place to prevent and control the disease, and they're going to want it verified. Then the media began to question the U.S. testing policy for BSE. "We have a low-risk animal disease on the ‘B’ list of the OIE," Clayton says, "with a decreasing incident rate and a question as to whether there is a connection to humans." From a food safety perspective, Clayton says, there needs to be testing. It's the same concept, he says, whether it's BSE or E. coli or any one of a number of other diseases. The question is which and how many animals should be tested. The New York Times ran a graphic comparing the number of cattle in different countries and the number of cattle tested within those countries. The United States testing program didn't look too good in the graphic compared to Japan, which tests everything. "But does that really send the correct message?" Clayton asks. The U.S. testing program is well within the international testing guidelines. The U.S. and Canada target high-risk animals. "The United States probably does 20,000," Clayton says. "Canada is probably going to raise theirs up to 8000, and we're sure talking about doing a whole lot more than that." To complicate matters, a new form of the disease has been reported in Italy. "Are we seeing mutations?" Clayton asks. In many instances the reactions have been based on political policy, not sound science, but there have been some positive things happening recently, Clayton says. Some of it has to do with science. Some of it has to do with politics. "Take the Japanese government," Clayton continues. "They have had a lot of problems relative to how they managed various crises. They had a bad situation with human blood." Some of the human blood they had was contaminated with HIV and was used in transfusions. They had problems with E. coli and didn't handle it very well. "They had a labeling scandal," Clayton says. They had their own BSE problem. "The confidence that the consumers had in the Japanese government really declined and became a really huge political issue," Clayton says. At the end of February, however, Yesuhiro Yoshikawa, a professor at Tokyo University, reported that it is more effective to eliminate "Specific Risk Materials," and to ban the reuse of them than to conduct 100 percent testing. "He's the chairperson of the prion research committee in their food safety committee," Clayton notes. The removal of SRMs was 20 times more effective in assuring safety than 100 percent testing, Yoshikawa said. Scientific solutions in Japan are boiling up, Clayton says, and may provide the political cover that regulators need. "That's the key in this situation," Clayton opines. "These governments have got to deal with the politics of it. It's just like the U.S. You've got to have political cover to get a lot of things done." |
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