Will Age & Source Verification Premiums Continue?

Don’t write off that $25-$50 premium for age and source verification just yet.

Despite Japan’s expansion of U.S. beef imports from cattle 20-30 months of age, age-and-source verification will remain important to Japanese and other Asian consumers, said Phil Seng, president and CEO of the U.S. Meat Export Federation.

“I don’t think paying premiums is somthing they [packers] look forward to. But if that’s what it’s going to take for the customer [it’s likely]… In the longer term, I think there’s going to be more emphasis on source verification, not only in Japan, but also in Korea [and other Asian countries].

Phil Seng, USMEF president and CEO, "I think there is going to be more emphasis on source verification, not only in Japan, but also in Korea (and other Asian countries)." Photo by Larry Stalcup

Phil Seng, USMEF president and CEO, “I think there is going to be more emphasis on source verification, not only in Japan, but also in Korea (and other Asian countries).” Photo by Larry Stalcup

Seng spoke to reporters at the recent Cattle Industry Convention and NCBA Trade Show in Tampa, Fla. He stressed the need to keep traceability intact for U.S. beef and pork, while praising the expansion of U.S. beef sales to Japan.

“There are no imminent issues at the present,” Seng said, but if a situation comes up on sustainability of cattle production or animal welfare, “the fact that it is source verified tells the whole story of how that animal was processed. That’s going to be very important.

“Having source verification is at the core base. You actually make a brand. This is an attribute… You’re actually adding value to the customer.”

The new Japan trade ruling went into effect Feb. 1. It allows the U.S. to export beef from animals under 30 months of age to Japan with the exception of ground beef, which will be phased in after a surveillance period to ensure that the new export protocol is proceeding smoothly, USMEF said.

“This is an extremely positive development that successfully addresses one of the longest standing issues between our two governments,” Seng said. “The U.S. beef industry – from farmers and ranchers to exporters – will benefit from increased exports to this premium market.

“At the same time, the trade and consumers in Japan will see a wider variety of beef products and improved availability of U.S. beef in the retail and food service channels.”

The Japan ruling adds to already huge beef export numbers. USMEF said the value of 2012 beef exports rose 2% to a record-high $5.51 billion on 1.13 million metric tons of sales. The per-head export value for beef hit $216.73, a $10.36 increase over 2011. Contributing to that was a new monthly record value of $242.65 set in December.

Unfortunately, USMEF said challenging export conditions exist that included “non-science-based trade barriers” in several key markets and an anemic economy in certain regions.

Seng particularly reacted to the recent decision by Russia to ban U.S. meat imports to protest the use of ractopamine, a popular growth promotant. The product has been proven safe by USDA and other scientific testing, and approved for use. However, Russia sided with the European Union and is voting against the use of the product.

“It was a hard kick in the you-know-what,” Seng said, bluntly.

“The loss in Russia is significant – about $300 million in (U.S.) beef exports and $250 million in pork exports. This is a regrettable situation. We are all hopeful we can have improved relations with Russia, especially in agriculture. It’s a key market and a growing market.”

He said Russia is on a mission to develop its own beef, pork and poultry industry, which is one reason behind the halt in U.S. purchases. “We favored Russia getting into the WTO,” Seng added. “We felt this would be an opportunity for Russia to conform to international norms.

“At this point, Russia has flagrantly ignored these norms. They have not shown good will to conform.”

USMEF expects Russia resume buying U.S. beef.  It could happen once the frozen seas around the Baltic ports thaw this spring. “Our expectation is this won’t last forever,” Seng said. “The Russians need this product. They have tremendous problems domestically on the pork and beef side.

“The U.S. is poised to supply that market.”

– By Larry Stalcup

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