December 30, 2003
New Zealand May Feel Fallout of Mad Cow Case in US
New Zealand beef farmers should be more concern about beef export prices in North America than any price rise in Asia, the head of a leading meat company said.
The single case of mad cow disease in Washington state last week was bad news for exports to the United States of New Zealand "manufacturing" beef used in hamburgers, Anzco chairman Graeme Harrison said.
Earlier indications suggested that live cattle prices in the US would fall at least 10% when markets reopened this week.
New Zealand exports would not be immune from the price drop - it would apply to everyone, Mr Harrison said.
"Americans won't differentiate between domestic and imported meat - if anything, there is a strong bias to domestic beef," he said.
Anzco's beef operations include two Riverlands plants in the North Island and three plants in the South Island. Anzco also has Canterbury Meat Packers and Five Star Beef. In total it has a turnover of more than $900 million and 2000 staff.
It was hard to say how far meat prices would drop in the US, though they had been good in recent months, Mr Harrison said.
"We have seen quite good demand in the United States."
Prices for imported bull beef in the US were US125 cents a pound last month, up more than 30% in a year.
Prices for domestic US prime beef cuts had been at record levels, with a shortage of good grain-fed beef for restaurants, in part because of a mad cow disease case in Canada in May.
More than half of New Zealand's beef exports go to the US and Canada - about 70% of the total export trade of $1.7 billion.
It was too early to say if there would be an overall benefit or loss to New Zealand farmers, Mr Harrison said.
It would be "a net positive for some companies that concentrate on North Asia", though for every company the biggest market was North America.
Asian prices for grain-fed beef had gone up already, but how far they would go was hard to say, Mr Harrison said.
New Zealand is the fourth-biggest beef supplier to Japan, well behind Australia and the US.
Canada had beaten New Zealand as a supplier to Japan till the mad cow disease case found in Alberta earlier this year.
New Zealand exported more than 46,600 tons of beef and veal to North Asia last year - a fifth of the amount sent to North America.
Mr Harrison said there would also be opportunities to sell more New Zealand beef in Korea, Hong Kong, Taiwan and even Mexico, which had also barred US beef imports.
Japanese tended to eat grain-fed beef, not grass-fed, so Australia stood to gain first with its feed-lot industry, he said.
"But there could be the potential to get more interest in grass-fed product (in Japan)."