October 23, 2006

 

US beef faces a tough road to recovery in Asian market

 

 

Even though South Korea and Japan, both major US beef customers,have re-opened their doors to the once-banned US beef, exports to both countries have been slow to recover, Asian analysts said.

 

Stricter rules have made providing sufficient volumes difficult, said Jung Mingukof the Korea Rural Economic Institute.

 

The Asian market for US beef, once worth more than US$2.3 billion, is now only a tenth of what it was before the ban in 2003.

 

It may take a few years for US beef to regain the market share it once held in Asia, said Jung.

 

However, American beef companies may be loathe to wait that long. Tyson Foods Inc, the top US beef producer, said recently it is cutting production due to slow demand from its top export markets, mainly in Asia.

 

Tyson has been hoping fervently that Japan and South Korea would relax its rules.

 

Japan specifies that it would only accept boneless beef from animals under 20 months of age and South Korea insists on only boneless beef from animals up to 30 months.

 

Since Japan lifted its ban on US beef in July, only 3,800 tonnes have arrived in Japan, compared to the 25,000 tonnes monthly average in 2003.

 

Besides the strict rules hindering growth in US beef consumption, there is also a need for some time to build lost trust among Japanese customers, Toshihiro Nagahama, senior economist at Dai-ichi Life Research Institute said.

 

While the South Korean market has been opened, shipments have not been forthcoming as the South Korean authorities insist that if bone fragments are found, US beef would be banned again, a move which put off many US exporters who insist zero bone fragments would be impossible to achieve.

 

In fact, plans to use an X-ray system to detect any bits of bone in US beef shipments are being discussed by authorities in South Korea.

 

Although a recent poll showed that most Koreans had no plans to buy US beef,  officials said demand would pick up quickly if the product returns.

 

For evidence, one has only to look at Taiwan, US beef's sixth-largest export market, where it regained top spot in less than a year after returning in February.