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Monday, September 20,2004

What's ahead for U.S. beef?

by WLJ
Looking into the future is tricky business. As renowned economist Peter Drucker once said, "Forecasting future trends is a somewhat futile exercise. The best we can do is to take trends that are already occurring and extrapolate them into the future." The following trends and projections represent a consensus of numerous analysts in every beef industry sector, from seedstock to consumer. These trends, listed in no particular order, are likely to occur over the next few years and into the next decade. Global markets will increasingly liberalize, assuming that developed nations, the U.S. and Canada included, don't adopt extreme protectionist policies. As developing nations become more affluent, their first demand is for more protein in their diets, especially animal protein. Driven by rising demand, total world meat production is projected to increase 13 percent by 2013. Beef is expected to parallel this overall increase. The U.S. and Canada will continue to dominate world production of high-quality beef, primarily because they can more economically produce grain-fed beef. Plant geneticists, however, are capable of developing grain varieties adapted to non-traditional environments. This could enable nations such as Brazil and Argentina to become competitive in the global market for high-quality beef. The world's water supply is becoming increasingly scarce. Water will be the "oil" of the 21st century. Expect water management to reach the top of the political agenda in the near future. Consolidation will continue, especially in the retail, packing, and feedlot sectors. Today, the top five supermarkets account for 50% of total supermarket sales. By 2010, this could be 75 percent. Meanwhile, the top 30 cattle feeding companies account for about 40 percent of the fed cattle. That could be more than 50 percent by 2010. More than 70 percent of fed cattle are processed by the top three packers; by 2010, they could be processing 80 percent. Communication and coordination between segments will increase as the industry becomes more vertically "coordinated." This needs to happen to remain competitive with other proteins. Be assured, however, that our industry won't vertically "integrate" like poultry. No single entity could invest the amount of capital—estimated at more than $6 billion—required to integrate from seedstock through retail. Contractual arrangements between feedyards and cow-calf producers, and between feedyards and packers, will continue to grow. Such contacts are needed to ensure that retail and foodservice clients consistently meet their customers' needs. Failure to deliver the specified supply on time, every time, is a sure way to lose business. Adoption of an individual animal ID and source verification system will help the U.S. remain competitive globally. It won't be easy, but it is certain. Fed cattle marketed outside the spot/cash market could increase from the current 50 percent up to 80 percent by the next decade. Branded beef currently is estimated to be 20 percent of the market. By the next decade, that could be 60 percent. Today, most branded beef products carry national brands. In the future, supermarkets will want more products in the beef case to carry their private store labels. Improved packaging technology will encourage supermarkets to offer more case-ready beef products, which currently account for about 30 percent of total units in the retail meat case. Case-ready processing, where nearly all the fat and bone is left on the packinghouse floor, will enhance the value of cattle with higher red meat yield. Instrumentation capable of accurately assessing beef tenderness at line speed in the packinghouse will finally be developed. This will allow factors other than marbling to be used as indicators of tenderness, as the correlation between marbling and tenderness is not high. But, such technology won't diminish marbling's value, as it is highly correlated with juiciness and flavor. Today, the demand for well-marbled beef, mid-Choice and higher, accounts for 25-30 percent of the market, which likely won't change. The value of "guaranteed tender" USDA Select, however, will increase. As intervention strategies improve, the incidence of disease outbreak and beef recalls due to bacterial pathogens, such as E. coli, pasteurella, campylobacter and listeria, will decline. Consumers will grow even more confident about beef safety, but the industry can't afford to relax efforts in this area. The current excitement over low-carbohydrate diets will eventually peak, and other fads will come into play. However, demand for beef will remain strong and not decline along with the low-carb fad. Regardless of trends, foods need to taste good or they won't have staying power in the marketplace. The good news: taste is beef's number one attribute. Specialty/niche food markets are growing exponentially. Once dismissed as a fad, the natural/organic market is growing at a 20 percent annual rate. Increasingly, producers will ally in partnerships, alliances, and cooperatives to produce beef for these specialty markets. Cow/calf producers can look forward to a few more years of profitability. Despite the positive margins, producers must continue to control their unit cost of production ($ cost per pound of calf). The veterinary profession will serve increasingly as a source of information for cattlemen on numerous topics. Veterinarians will be prepared to provide valuable advice on genetics, nutrition, reproduction, marketing, and other beef production areas. Improved production efficiency throughout the beef value chain will help beef better compete with pork and poultry. Of all feed energy expended in producing beef, 70 percent goes solely to maintenance, and only 30 percent to productive processes such as growth and lactation. An astounding 50 percent of total feed energy is expended at the cow herd level. Animal scientists recently developed an expected progeny difference (EPD) for cow maintenance. It will enable producers to put selection pressure on the cost of maintenance. Feedlot technology will result in continuing improvement in feed conversion. We know some cattle are genetically capable of converting at a ratio of five pounds of feed to one pound of gain or better. Increased coordination of industry segments will increase efficiency and reduce the cost of producing beef. Recent research reveals early weaning—90-150 days of age—offers many advantages, particularly during drought. This alternative management strategy is likely to increase. In addition, several studies show early weaning, followed by a backgrounding phase that does not result in an unduly prolonged period of dietary restriction, can enhance eventual quality grade. Another study shows heifer calves early-weaned at 90 days reached puberty at a younger age and had a higher pregnancy rate than those weaned at 230 days. Because traditional crossbreeding systems are cumbersome, especially in small herds and in intensive rotational grazing systems, more commercial producers will utilize heterosis by rotating unrelated F1 hybrid bulls composed of the same two breeds (A••B x A••B). This can result in a 12 percent increase in pounds of calf weaned per cow exposed over the average of the parental breeds. Rotating F1 bulls with only one breed in common (A••B x A••C) can result in a 16 percent increase. Because of the increasing demand for hybrids, more seedstock breeders will respond by offering more hybrid bulls to commercial customers. Today, nearly everyone has equal access to outstanding beef genetics. Customer service will become the differentiating factor in the seedstock business. "Full-service genetic providers" will form the new generation of breeders. These breeders will be able to analyze customer production systems, determine the genetic package to best fit that need, and guarantee consistent production at an appropriate price. The National Beef Cattle Evaluation Consortium will use genetic markers validated in the National Cattlemen's Beef Association's Carcass Merit Project to enhance accuracy of carcass EPDs. DNA tests for carcass traits also are being commercially developed. Expect a proliferation of similar diagnostic tests in the next few years. Cloning holds great promise for genetic advancement. However, early embryonic mortality, late-term abortions, and low calf-survival rates must be resolved before its use is widespread. Food companies will face increased pressure to develop animal welfare plans as a way to assure consumers that food animals are humanely raised and handled. Other important issues, which aren't covered in this article, include land use, the environment, and government regulatory policies. These issues will continue to be a challenge for the industry just as they are currently. — Harlan Ritchie (Harlan Ritchie is a professor of animal science at Michigan State University in East Lansing, MI.)

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Monday, September 20,2004

Oregon wolf reintroduction issue under debate

by WLJ
Oregon Governor Ted Kulongoski would like to see wolves back in Oregon although the species has been extirpated from the state for more than 50 years. Last year, Kulongoski commissioned the Oregon Fish and Wildlife Service (FWS) to draft a plan for wolf reintroduction. The 14-member committee appointed to advise and develop a draft a Wolf Management Plan concluded their scheduled meetings last week, however a consensus was not reached. The 14-member group was designed to represent interests from livestock owners, to hunters and environmentalists. Given the diversity of the group, total agreement on how the wolves are suppose to be managed was not expected. But, as the livestock industry is noting, strong opposition for the plan is coming from the two producer members on the panel. Sharon Beck, co-chair of the wolf task force for the Oregon Cattlemen's Association and member of the National Cattlemen's Beef Association (NCBA) wolf management task force, served on the panel, and said she cannot support the proposed plan. In the first place, Beck said wolves do not have a place in Oregon and, secondly, the plan is not fair to livestock owners. The way the debacle began, Beck explained, is that cattle producers approached Oregon's FWS to request a delisting of the wolf citing the Oregon Act, which calls for a balanced use of the land, as well as the cost burden to manage wolves when the state is already in a budget deficit. According to federal government regulations, Oregon is not required to be host to gray wolves. Wolves were listed in Oregon because they were grandfathered in as part of the federal listing of the species. Cattle producers filing a delisting proposal is what prompted environmentalist groups to file a petition to protect the species, according to Beck. She said the response producers received to their petition is there's not enough science to declare the wolf wasn't in danger of becoming extinct in Oregon. However, producers said FWS records indicate the wolf has not been present for more than half a century. "It is one of those circular arguments that you just can't get a resolution too," said Beck. "How are we going to show they (wolves) are recovered when they aren't here." Beck also said that, according to Oregon law, wolves don't have to be recovered, they just have to be conserved. But conservation can have various meanings. In her opinion, it should mean not killing wolves that enter the state. In the opinions of both the Department of Justice and the environmentalists', Beck explained conservation means allowing wolves to recover in Oregon. The management plan was written with the goal of recovering the wolves. "My goal statement would have said that you keep wolves out and save money for the state," said Beck. "Their goal statement was to ensure the long-term survival and conservation of gray wolves while minimizing conflicts with humans, primary land uses and other Oregon wildlife." As far as the specifics of the draft management plan, FWS proposes a minimum of four breeding pairs be present in Oregon for three consecutive years before the wolf will be removed from the endangered species list. It also proposes education of livestock producers and landowners on nonlethal management techniques. Then, depending upon the population growth of the wolves, there are three separate management plans proposed, all of which are not livestock owner friendly in Beck's opinion. The draft proposal has three pieces of the plan that would require legislative action. Those three pieces are: • Reclassification of the wolf to "special status mammal" within the game mammal category. Special status means opening up the range of management tools available to control populations of wolves, including hunting and trapping; • Options for killing wolves, since it is not included in Oregon law; • Funding for a compensation program that reimburses livestock owners for depredation of their livestock by introduced wolves. Beck said she submitted a model to the panel asking for full and fair compensation to livestock owners. "We don't want them here, our ancestors killed the wolves off," said Beck. "But, if they do, they better figure out a way to pay for livestock that they kill and we will figure out a way to live with them. They also better give us a way to kill a wolf that we catch killing our livestock. In other words, it needs to be the state and the Commission's responsibility to take care of the wolf for what it does. That's what is written in Oregon law." Eastern Oregon county commissioner, Ben Boswell the other adversary of the management plan that was on the panel with Beck. Boswell called the chore of establishing and managing wolves in Oregon a "fools errand." "I propose that wolves be kept from Oregon by whatever means are necessary," said Boswell. "Wolves have no biological, social or legal right to be in Oregon and certainly no one has a right to add a threat to our rural lifestyle." The draft management plan was discussed by Beck, Boswell and the other panel members at a series of 10 meetings. However, Beck said the issues of depredation and compensation were skipped over in these meetings and since they reached the end of the term for the meetings the issues will not be discussed. Instead, the plan was presented to Oregon's FWS. Beck said she is presently writing a minority opinion of the management plan and will set the record straight on the legal status under which FWS is trying to reintroduce the wolves. Beck is also writing a report and both opinions and reports will be submitted with the plan. These documents will be presented to the Oregon Fish and Wildlife Commission who will have a rule making process and public meetings around the state. However, public testimony will not be taken at the meetings, which is a concern to Beck since she feels the Commission needs to know what people are thinking about the possibility of wolves in Oregon. After the meetings, the Commission will either adopt or delay the plan, possibly by January 7, when Oregon's legislature reconvenes. Even is the plan is adopted, the legislature will still need to vote on the three issues which fall under legal jurisdiction. — Sarah L. Swenson, WLJ Associate Editor  

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Monday, September 20,2004

Second dairy cow retirement scheduled for October

by WLJ
Beginning October 1, a second dairy cow retirement will be put into implementation in order to reduce national milk supplies and spike sputtering milk prices. Several beef market analysts said that while the program will ruffle some cow/calf producers' feathers, that the program will probably not hurt the beef market that much, if any. According to officials in charge of Cooperatives Working Together (CWT), a self-funded, self help program of the National Milk Producers Federation (NMPF), a total of 49,000 dairy cows will be removed out of production permanently and done so by being taken to beef processors. In total, the CWT initiative is expected to reduce nationwide milk supplies by 870 million pounds. This is the second time that CWT funds will be used to retire cowherds, permanently. The first retirement initiative happened during August of 2003, when a total of 32,274 cows, representing 608 million pounds of annual milk production, were processed. CWT's management committee voted to allocate 80 percent of it funds to the herd retirement program, with the remaining 20 percent earmarked for an export assistance program. Beef market analysts said that just the announcement of more dairy cows being processed has gotten beef producers "up in arms" in the past. However, they said when looking at the overall market, the impact should be minimal. Most sources said that there is so much additional need for lean beef from the hamburger and further processing sector, that the impact of 49,000 slaughter cows won't be felt much, particularly if the sale of them is spread out over several months. "If we were talking 100,000 head or more, then there might be an issue, but at less than 50,000 head, that is an additional per month figure of 8-12,000 head, which isn't that much," one Denver-based market analyst said. "On top of that, we are talking about cows that don't bring much product to the table, and that needs to be taken into account also. They are providing lean product that will go towards hamburger or some other further processed products." Information on the bidding process for the dairy cow retirement program will be made available, by CWT, starting September 27. That information is available by accessing the web site www.cwt.coop, or calling 888/463-6298. — Steven D. Vetter, WLJ Editor

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Monday, September 20,2004

USDA: 11B bushel corn harvest likely

by WLJ
— Frosts ignored by agency; analysts still uncertain. — Grain price down early, but recovering last week. In its most recent crop production forecast, released Friday, September 10, USDA's National Agriculture Statistics Service (NASS) dismissed most fears about early frosts in several northern-tier corn states and projected an 11 billion bushel corn crop, a record by over 800 million bushels. The nearest-term corn futures, and current cash corn prices dropped around, or below, $2.10 early last week, in direct response to that report. However, as last week progressed corn prices rebounded again as several analysts indicated that there is still potential for some feed corn loss. Several cattle market analysts said it is too premature to figure in $2-or-lower corn, but that it is still possible, particularly if the top corn producing states go through the rest of September without a severe freeze. The most recent forecast was on the high end of analysts' pre-report estimates, and up almost 70 million bushels from USDA's August production forecast. This year's projected corn crop is eight percent larger than last year's record crop of just over 10.1 billion bushels. Yields have been forecasted at seven-plus bushels more per acre than last year, when a then-record per-acre yield of 142.2 bushels was reported. In its report, NASS said, "Yields are forecast at record high levels in all Corn Belt states, except Minnesota and Wisconsin, as weather conditions have been mostly favorable throughout the growing season. However, brief periods of freezing temperatures in the northern Corn Belt and adjacent areas of the Great Plains raised concerns about the crop being able to fully develop before a killing frost occurs." Of the top 10 corn producing states, eight are expected to show increases in both acres harvested and per-acre yields, compared to last year. One of the top 10 states is expected to show a downturn in both figures, while the other one is expected to harvest the same amount of corn, but at lower yields, than a year ago. Nationally, only seven states are showing potential declines in yields, compared to 2003. Those states are Alabama, Colorado, Michigan, New York, North Dakota, South Carolina and Wisconsin. Wisconsin is the only top ten producing state with a yield decline expected. Commodity analysts that projected a decrease in USDA's production forecast, compared to last month, were still uncertain whether or not yields would be near as high as the agency has indicated. "It's not the fact that there's not a record crop on the horizon, because there is, and that's not in question," said Barry Turner, market analyst and consultant with TL Agriculture Commodities Inc. "It's still hard to believe that the harvest will be that much larger than last year, particularly with unseasonably-cold summer weather being reported across the country, particularly major corn producing areas." Turner also said the report is a "good news, bad news" situation, with corn producers facing the prospect of very low prices, but livestock producers, particularly cattle feeders and commercial hog raisers, looking at even cheaper feed grain prices through the rest of the year. In addition, feeder cattle prices aren't expected to see as big of a downturn as was once expected because of the corn situation. "We usually see a reverse $1-1.50 move in feeder prices for every dime move in corn prices, and a corn projection of 10.6-10.7 billion could have meant an additional $3-5 decline in feeder cattle prices the rest of this month," Turner said. Instead of that, last week's feeder cattle futures movement was upward with the nearby contracts getting back up $113 per cwt. "And that was even in the face of a dime gain in the nearest-term corn futures contract (December)," said Turner. "It's amazing what an 11 billion bushel projection did for the psyche of cattle feeders in terms of getting back into the feeder market and filling up some empty pen space with cattle that could utilize cheap feed." Turner, and several of his colleagues, suggested, however, that any "significant" corn purchases be done now in the form of forward contracts in order to prevent any negative impact from a possible downward readjustment in the corn production figure. "There's still a good possibility several hundred million bushels of corn could be taken out by weather or other situations, and that could mean at least $2.50 corn later this year, which could be costly given the fact that feeder cattle remain at unheard of price levels," Turner said. Last Wednesday saw the December corn contract close at $2.18, after hitting $2.20 earlier in the day. In addition, March 2005 closed at $2.28 last Wednesday. In both cases, prices were up over a dime compared to Monday's closes. Most sources indicated that there is still some concern that USDA's forecast is too big for the current growing conditions and maturity levels. — Steven D. Vetter, WLJ Editor

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Monday, September 20,2004

Missouri auction ahead of identification curve; more sales planned

by WLJ
— RFID program adds value to calves. While a large portion of cattle industry participants have been waiting on a nationwide program before starting to implement an individual animal identification system, one central Plains livestock auction took a more proactive approach and is ahead of the livestock ID curve. This past June, Joplin Regional Stockyards, Joplin, MO, held a special late week feeder calf auction when it offered up more than 6,000 head of calves and yearlings that were all fitted with radio frequency identification (RFID) ear tags. In addition to tagging the animals with RFID, the auction barn scanned those IDs three times before the animals left their facility. Auction barn officials said that allowed the animals to be logged into a database, which can be used to track their progress through the production chain and to trace back their history in the event a food safety or animal health issue arises. The animals' IDs were scanned once after being unloaded, once when they were sold and once when they were loaded out from the auction barn. According to Steve Owens, co-owner of Joplin Regional Stockyards, the company wanted to show producers that ID-taging isn't as intimidating as it appears, and that the amount of additional time, effort and money isn't that significant, particularly when the financial benefits are noticed. "We were very happy with the response to last June's sale," said Harmon. "There is definitely a need out there for this kind of program to already be in place, and we feel we are meeting that need and helping producers who want to be prepared when a national (ID) program is fully in place." One of the arguments against ID is the amount of additional expense to tag the animals with a special device and collect the data. Owens indicated, that on their end, the expense wasn't that great, and that the cost to producers wasn't noticed too much because of the premiums those identified cattle brought, compared to prices paid earlier in the week. "We were seeing cattle bringing $6-8 more during the special (RFID) Thursday sale, than similar cattle brought during our normal Monday sale," said Owens. "While quality of calves was very good, a lot of that premium had to do with the extra value we were adding to those cattle by equipping them with technology that will help them be tracked through the farm, feedlot and/or packing house." Not only are the electronic IDs able to help trace back the history of cattle, including ownership and origin, but they are also helpful in allowing producers collect information about their livestock, which could be beneficial in changing their breeding or management program to improve profitability in the future. "This is technology all producers need to be associated with, whether or not they decide to utilize it right now or not," Owens said. "We are facilitating the familiarity process and offering support in a situation that isn't easy to cope with." The Joplin auction barn has scheduled several more RFID feeder cattle sales, with 12-14 already planned between late October and March of next year. "We have been very happy with the result of our last value-added RFID sale, and look forward to similar results, and better, down the road," Owens said. "Things are looking to evolve even further, specifically were are looking at developing an even more comprehensive database for producers to access specific animal information on. "We do not have the program perfected, but we are working on improving the maintenance of individual animal data, as well as setting ourselves up as the first line of defense when it comes to attacking a potential animal health problem." Owens indicated that other auction facilities across the country have inquired about the Joplin's facility program, and that they are looking into possibly including animals sold at other facilities in their original database. "This is for the betterment of the entire industry, and that is something we can benefit from both directly and indirectly," Owens said. "A mandatory ID program is going to happen sometime, and it's better to be prepared now than being unprepared when the final program is finally put into place." In addition to the nationwide traceback situation, Owens said including RFID into its "value-added" cattle was simply a way to further advance the premiums to producers who are taking the extra time and effort to differentiate their cattle from others. "There are already programs in place that utilize individual animal ID, particularly when it comes to niche beef programs, and those programs pay producers for raising their cattle under a strict health management system. ID differentiates those cattle further, and gives potential buyers an idea about which cattle deserve that extra premium," Owens said. — Steven D. Vetter, WLJ Editor  

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Monday, September 20,2004

Japan adopts 20-month exemption

by WLJ
— U.S. beef acceptance still down the road. — Japan's 12th case no factor. Japanese government officials last Wednesday formally announced that they would exempt cattle under 20 months of age from being tested for bovine spongiform encephalopathy (BSE). However, the entry of U.S. beef into Japan will be delayed until the two countries can agree on the science, or verification program, that will be used to factually establish the age of cattle. USDA officials' reactions varied widely as some indicated they were pleased to know the direction of the situation and others were disappointed that Japan didn't make their testing exemption 24 or 30 months of age. "We now know what we have to do, but it's disappointing because there is no international scientific standards indicating that cattle under 30 months of age are at ‘major risk' to contract the disease," a high-ranking USDA official told WLJ. That same official said there will be efforts to get Japan to at least raise the exemption age to 24 months, however, the likelihood of that happening is unlikely. Japanese officials were reiterating, last week, the fact that two of the 12 cases of BSE confirmed in Japan have been in cattle 21 and 23 months of age. "BSE has been found in cattle under 30 months of age, and not testing for the disease in those cattle risks the health of consumers and our cattle herd, Japanese officials have told us," the USDA spokesman said. "We still are adamant that the risk of younger cattle contracting the disease is near non-existent, however, the Japanese appear to think that any risk is too much." Two weeks ago, USDA officials indicated the agency might be open to lowering their 30-month exemption to 24 months, and using a combination of dentition and bone ossification to determine the age of cattle. Bone ossification in particular has been proven to determine cattle under 24 months of age and over that same age threshold, however, it hasn't been shown to be accurate on the specific age of individual animals. USDA and U.S. beef industry officials were showing some frustration with Japan's 20-month testing exemption because the Japanese weren't open to giving them options on how to verify the age of individual cattle. "They (the Japanese) are putting on a good show right now, but their protectionism is still shining through," a Washington, DC, beef trade lobbyist told WLJ. "How are we to move forward when they aren't giving us any specifics as to what technology or the kind of program to use that would allow us to move forward with accessing their market. It's hard to understand why they are being so hard to deal with when both (Japanese) consumers and restauranteurs are anxious to get U.S. beef back into their diets and menus, respectively." Japan's Ministry of Agriculture, Forestry and Fisheries has been asked to accept USDA's pending individual animal identification program as the verification tool for cattle age, however, a MAFF statement indicates it is skeptical of such a program's reliability. "Determinations of cattle age by ranchers on a voluntary basis lack credibility," a MAFF statement said. "We have asked USDA to provide proof of animals' ages in a scientifically valid manner and compensation be paid (to Japan) if problems arise." Last week's announcement that Japan had confirmed its 12th case of BSE was not thought to be of any consequence to the ongoing U.S., Japan beef trade discussion. Most officials said the fact the most recent case was in a five-year-old cow made it a non-issue in the broad scheme of things. — Steven D. Vetter, WLJ Editor

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Monday, September 20,2004

Japan, Mexico prepare to sign Free Trade Agreement

by WLJ
Japan and Mexico are signing a Free Trade Agreement (FTA) this week, which will mark the first time Tokyo has made a comprehensive pact involving agriculture products. This landmark treaty is beneficial to both sides, giving Mexican farmers more export opportunities, and Japanese auto and steelmakers more access to the Mexican market with a reduction in tariffs. Over 300 agriculture products in total are covered in the agreement. Of particular interest is the new preferential tariffs for pork, especially since the Japanese border is still closed to U.S. beef. Mexican farmers will be able to export 80,000 tons of pork a year to Japan, a quota agreement that was said to be a sticking point in the negotiations along with orange juice quotas. At the present time, almost all of Mexico's pork goes to Japan. According to the agreement, Japan will also give Mexico no-tariff quotas for oranges, chicken and beef. Mexican Agriculture Minister Javier Usabiaga said in a press statement that he estimates Mexico's agriculture exports to Japan could grow by as much as 10.6 percent annually over the next 10 years as a result of the no-tariff quotas. Japan and Mexico have been working on this FTA for nearly two years. The inclusion of such a plethora of agriculture products is still somewhat of a surprise to the Japanese public, according to news reports, because Tokyo has zealously protected those products in the past, bowing to the political clout of farmers. Nonetheless, Japanese consumers are looking forward to enjoying cheaper agriculture products once the agreement takes affect. Mexico Ambassador to Japan, Miguel Ruiz-Cabanas said, "There are many people enthusiastic about selling products from the agriculture sector to Japan. One of the significant aspects of this treaty is that for the first time Japan has decided to open its agriculture sector." Ruiz-Cabanas added that he believes opening the agriculture sector was an important step in terms of long-term restructuring of Japan's economy. Japanese economists have estimated that the country is losing nearly $4 billion annually without the FTA with Mexico. The Japanese/Mexico FTA is set to go into effect sometime after January 2005. Mexico is the second country Japan has signed a FTA with—the first being Singapore. Japan has also recently initiated free trade negotiations with South Korea, Malaysia, Thailand and the Philippines, and is said to be considering launching negotiations with Indonesia and Taiwan. — Sarah L. Swenson, WLJ Associate Editor

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Monday, September 20,2004

USMEF survey shows Taiwan's consumers demanding U.S. beef now

by WLJ
Taiwanese consumers are most influenced by television advertising when it comes to buying beef, in future the majority will want to know where the beef they consume comes from and 74 percent will or are likely to buy and eat U.S. beef after the import ban is lifted. These are the results of a consumer survey conducted by the U.S. Meat Export Federation (USMEF) at Taiwan's premier food show, Food Taipei 2004. The show provided an excellent opportunity for USMEF to survey the 50,000 attendees on their attitude to U.S. beef and the bovine spongiform encephalopathy (BSE) question. More than 1,000 people participated in the survey and the results showed that younger people were more likely to eat beef and a smaller number than ever, 18 percent, eat no beef as Taiwan's traditional eating patterns are changing. Less than half the people in the survey said that news reports on BSE strongly influenced their beef buying in restaurants and supermarkets. To entice Taiwanese consumers back to U.S. beef, the survey found that special offers on price (47 percent), cooking and tasting demonstrations (34 percent), and free giveaways (12 percent) would be the best inducements. Survey of Taiwanese consumers at Food Taipei 2004 Detailed results of the survey as are as follows: 1. How does the BSE related news influence your shopping for beef in a traditional market or supermarket? • Very highly: 19% • Highly: 30% • Average: 31% • Low: 11% • Very low: 9% 2. How does the BSE related news influence your shopping for beef in restaurants? • Very highly: 18% • Highly: 27% • Average: 33% • Low: 12% • Very low: 10% 3. Will you care about the place of origin while consuming beef in a restaurant, supermarket, or traditional market? • Yes: 53% • Probably: 26% • Not sure: 11% • Should not: 4% • No: 6% 4. Will you still buy U.S. beef in a supermarket or traditional market after being aware of BSE news? • Yes: 49% • Probably: 0% • Not sure: 24% • Should not: 15% • No: 12% 5. Will you still buy U.S. beef in a restaurant after being aware of BSE news? • Yes: 25% • Probably: 28% • Not sure: 22% • Should not: 13% • No: 12% 6. Will you continue to buy or consume U.S. beef after the ban on U.S. beef is lifted? • Yes: 39% • Probably: 35% • Not sure: 17% • Should not: 4% • No: 5% 7. What kind of activity do you think could enhance your willingness to buy or consume beef most? • A special offer on price: 47% • Free giveaway: 12% • Cooking demo/tasting: 34% • Charity activity: 7% 8. Which mass medium do you think has most influence on your beef consuming willingness? • TV advertisement: 75% • Newspaper advertisement: 14% • Radio advertisement: 4% • Bus/Metro advertisement: 3% • Outdoor billboard: 4% In 2003, the U.S. beef industry exported 19,225 metric tons valued at $76.5 million to Taiwan, its 9th largest export market. Annual U.S. beef exports to Taiwan have totaled between 5,000 and 20,000+ metric tons in the last decade.

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Monday, September 20,2004

Hagata Ranch celebrates 100 years

by WLJ
A large crowd of nearly 400 cattle people attended the Hagata Ranch Centennial Celebration, September 4, Susanville, CA. Located some 100 miles north of Reno, NV, off Highway 395, Frank Hagata's father, John, founded the ranch in 1904 in Lassen County, one of the premier ranching counties in the state. In attendance was a big crowd of mostly ranch people. Everything for the day was perfect, weather, the delicious barbeque and some of the best live western music that can be heard. This is dry country but the Hagata's herd of some 500 mothers cows were content to graze in greener-than-normal pastures located nearby. Frank and Bernice Hagata, are a couple well known throughout the state. Bernice served for nine years as the range representative for the California Cattlemen's Association on the California Beef Council, starting in 1992. Their son, Daron, and his wife, Tatty, are their ranch partners. The father-and-son team does most of the ranch work. The cows are calved out in the spring and after the calves are weaned in November, are held until January and then sold. An average weight on the steers between 6-7 months is 650 pounds. All the calves are by Angus bulls and branded halfway down the left leg with a Box H. The Hagatas also have two daughters. The oldest is Darcy Hanson and her husband, Jack. The other daughter is, Teri, who is married to Joe Bertotto. Frank and Bernice celebrated their 53rd wedding anniversary September 1. Frank's father and his mother, the former Anne Bouret, no doubt took a lot of pride in their ranch and their family. There were five children and the survivors include Frank and two sisters, Marie Simmons and Henrietta Always. — Dick Crow, WLJ Publisher Emeritus

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Monday, September 20,2004

Industry supporting auctions on ID program

by WLJ
Producer organizations and industry officials agree, implementing a National Animal Identification Program (NAIP) is not going to be an easy task. For producers to start tagging every animal, and for data to be collected and kept for those animals in every segment of the production chain, there's going to be challenges to face. In particular, auction markets may be given the largest share of the chores in making sure animals are properly tagged. Other components of the industry are prepared to support auction markets with these changes and even see it as an opportunity for the market to provide a service to the producer. Rick Stott, vice president of Agri Beef, a long-standing family-owned business that has cow/calf ranches, feedlots and processing operations across the Northwest and Midwest, said no one really knows yet what auction markets will be expected to do if a mandatory national animal identification program is implemented. Stott is hopeful the answer to that quandary will be found in some of the pilot projects USDA is conducting across the U.S. Agri Beef is a partial funder of the Northwest Pilot Project, an upcoming project in California, Idaho, Nevada, Oregon, Utah and Washington that hopes to develop, implement, and test a process that will allow tracing a livestock animal through multiple livestock industry segments, across state and national borders, to its herd of origin within 48 hours in an efficient and cost effective manner. The project will involve at least one auction market in each of the seven participating states, and probably two or three auction markets in most states. Stott feels that with a national animal identification program, auction markets are in the best position to profit and expand their service to customers because of the demographics of the cattle industry. Stott said in looking at the cattle industry, 80 percent of the ranchers have herds smaller than 40 head. "Most of them don't even know this animal ID thing is coming," said Stott. "A person who only has 20 head is probably not going to go out and buy any kind of technology of substance. Typically they are going to come to the auction yard and that auction yard then has the opportunity to provide a service to register the premise, put in an electronic ID to identify the animal, and charge a fee to cover the cost of the service." He admits, at first it will be a challenge, but once all the details are worked out, it could become an excellent added venture. Stott encourages auction markets to become involved in the pilot projects in their region to help them work out the details, as well as to pay attention to what USDA is releasing about a NAIP and participate in any public comment periods. "In any new thing, there are people that jump out in front and embrace it and there are people that will lag back and fight it all the way to the bank," said Stott. "I suspect there will be opportunities for those people that really look for the opportunities." Julie Morrision, Idaho Cattlemen's Association feeder council coordinator, was hired by the Northwest Pilot Project board to be the coordinator. If a mandatory ID is implemented, Morrison said she doesn't envy the auction market operator who will have to deal with small producers that may never have heard of animal ID and yet will bring their animals to the auction market to sell them. Morrison said it will be up to the auction market to explain it to them and bring them into compliance. "At least for producers, it is fairly straight forward what is going to be required of them," said Morrision. "An auction market will have to deal everything under the sun and it could get kind of interesting." Morrison does feel that auction markets could turn it into a money making enterprise, if they charge producers to assign them a premise ID number. Ben Higgins, executive vice president of the California Cattlemen's Association also has compassion for the auction market owners and operators. Higgins said he sees a variety of initiatives working together to implement some form of a national identification program—from producers with premise ID to government and packers on tracking. "The auction markets have to figure out what they have to be doing in the middle of these two efforts," said Higgins. "And that is going to be real tough." Higgins also commented on the technology aspect of a National Animal Identification Program. Auction markets pride themselves on moving large numbers of animals through sales at a very rapid pace and the present technology could impeded that. "Auction markets present, without a doubt, some of the greatest challenges towards implementing a mandatory national identification program," said Higgins. "Once they get the auction markets figured out, everything else will be easy by comparison." In terms of technology, there are a handful of tag companies that have been used in electronically tracking cattle from ranch gate to the dinner plate. USDA has emphasized the fact that they are technology neutral in the U.S. Animal Identification Plan, and do not endorse one company's technology over another. Recently, in a mandatory electronic ID cattle sale in Joplin, MO, Allflex tags dominated most of the selection used by producers. Central regional manager for Allflex, Marvin Scott said he understands auction market's concern regarding the technology and adds that they are working on a system that will operate with the speed of commerce. In the Joplin sale he said they sold 6,000 animals in a matter of three or four hours. Scott said they backed up a little bit since the tag readers can only read one tag at a time, but they are working on repositioning the readers and painting them, so as not to distract the cattle. Nine readers in total were used in the sale and the cattle were read as they stepped off the trucks, as they exited the sale ring, and as they were loaded back on trucks to exit the facility. In general, Scott said the basic thing sale barns will need to concentrate on with a national ID is to select a reputable tag company and a reader and to make sure that whatever brand they choose, the tags and the readers meet ISO standards, meaning approved tags will read on approved readers. "We feel there are tremendous strides that can be made in putting readers in alley ways, off sale rings, in inbound and outbound situations, where we can get much closer to cattle moving through an auction, at the speed of commerce," said Scott. "We're not there yet, but we're getting there." — Sarah L. Swenson WLJ Associate Editor  

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