A decade ago, the U.S. beef industry was going global like never before. Production was rising, demand was growing, and everyone just wanted to buy more cattle. The excitement was contagious.
Then the growth markets crashed to a halt.
The first U.S. case of mad cow disease was diagnosed in Washington State and the global marketplace for US beef immediately changed. We still haven’t recovered from it–though now, at long last, it looks like we’ll have a chance to get those markets back.
Outgoing U.S. Trade Representative Ron Kirk and Secretary of Agriculture Tom Vilsack have announced a deal that could supercharge beef exports to Japan this year. Under the agreement, beginning Feb. 1, 2013 Japan will accept U.S. beef from cattle less than 30 months old, up from the previous limit of 20 months. The only exception involves ground beef, which will continue under the old restrictions.
Our trade diplomats deserve thanks for their efforts. Japan’s decision is long overdue, but it wouldn’t have been possible at all without a big push from Washington.
The beef industry, for its part, has learned important lessons about responding to a crisis–lessons that may help it later on, as new challenges emerge.
In 2003, Japan was the world’s biggest buyer of U.S. beef, importing nearly a billion pounds of it annually. This was no surprise: American beef is the gold standard. Nobody raises it as well as we do.
In December of that year, however, a case of bovine spongiform encephalopathy, better known as BSE or mad-cow disease, struck our herds. It’s a rare and poorly understood affliction, but science tells us that people who ate BSE-tainted meat can die from a brain disorder.
For three years, Japan banned all U.S. beef imports. When sales started again, they took place under such severe restrictions that volume remained low. Meanwhile, ranchers in other countries, especially Australia, took over what had been our dominant position in the Japanese market.
Sales have improved recently, to nearly 800 million pounds of U.S. beef in the last two years combined. The new rules could spur sales of more than 500 million pounds in 2013 alone, worth $1.5 billion.
That’s an additional $1.5 billion pumped into the American economy, like a miniature stimulus program–except that it won’t cost taxpayers a penny.
Why did recovery take so long?
Now we must ask ourselves why the recovery took so long.
The Japanese government definitely overreacted. Although mad-cow disease is a serious concern, Japan’s severe response was far out of proportion to the size of the problem.
For years, this was essentially what we said to the Japanese. It had the virtue of being true, but it was also a mistake on our part.
We should have recognized more quickly that a different message would have served our interests more effectively. Mad-cow disease had shaken Japan’s confidence in U.S. beef. To reassure their government and consumers, we should have taken additional concrete and transparent steps right away.
Eventually, we took them. We adopted new safeguards that have improved our ability to detect threats, prevent outbreaks, and respond to challenges in a timely way.
Going forward, we’ll do a much better job of stopping interruptions in our supply chain.
I wish mad-cow disease never had reared its ugly head. But it may be possible to say there’s a silver lining to what happened: The U.S. beef industry is even better today than it was a decade ago.
And we’re well positioned to grow. The successful completion of the free-trade agreement with South Korea in 2011 has opened new export opportunities there. Now we’re ready to return with real force to Japan, which almost certainly will become the top export destination for U.S. beef. (Right now, it’s Mexico.)
Even greater trade possibilities lie ahead. Much of Asia looks to Japan for leadership, especially on regulatory issues. Japan’s acceptance of U.S. beef will lead to an immediate sales spike in Japan, and it could encourage other neighboring countries to admit more of what we export.
China is the one we really want. Right now, it doesn’t import any U.S. beef directly. With a population of 1 billion people–and most notably an emerging middle class–it represents an incredible untapped market.
We’re ready, once again, to go global.