The Hindu Business Line : Japanese ban on US beef leaves Australia in a spin

WHEN US beef imports into Japan were banned in December, Australia, Washington's rival in the global bovine meat market, could have rejoiced. But it didn't.

The reason: It didn't make much business sense for Australia to rush and try filling the void created by the ban on US beef. Japan banned US beef after mad cow disease was detected in a Washington State dairy cow. Japan, which is currently under tremendous pressure to relent, says it will lift the ban provided the US tests all the cattle there.

Japan is a huge market for beef and as per 2002-03 statistics (July-June), the share of the US accounts for about 45 per cent, while that of Australia is 49.2 per cent at 270,000 tonnes by shipped weight. But Australia's beef export to the US is higher than Japan's at over 300,000 tonnes.

Australia, in fact, is in a sort of dilemma due to the Japanese ban on US beef. And, Japan is seeking more Australian beef.

One main problem for Australia is that US exports specialised beef to Japan. "It is difficult to compete with the US in specialised beef sector," says Dr Peter Barnard, an official with Meat and Livestock Australia.

The US cattle are fed on grains for a longer period of time, while Australian bovines are grass-fed. As a result, the US beef has more fat and this helps in shipping large pieces of single cuts. This, in trade parlance, is known as marbling (see box). The Australian beef, on the other hand, is shipped as a full set.

"Japan wants more of Australian beef but our industry is reluctant (to export), " says Mr Warren Truss, Minister for Agriculture, Fisheries and Forests.

Single cut beef makes up 10 per cent of the total bovine meat market in Japan.

"Australia's problem is that it has to change its production pattern. The cattle will have to be fed on grains at least for 100 days to cater to the Japanese market," says Dr Barnard. "Japan has also to provide a degree of certainty in the market," he says.

If catering to the specific demand of single cut beef pieces is a problem, then falling demand for bovine meat in Japan is also another source of worry for the Aussies. Moreover, beef exports to the US have been hit as the Americans now consume more home-made bovine meats.

Besides the ban, the Japanese themselves have cut their consumption of beef due to the mad cow disease outbreak. "Moreover, the Japanese Government had to buy all the unsold stocks of US beef with importers to tide over the crisis resulting from the ban," say industry players.

"Due to the Japanese ban, all the beef that the US used to ship to Tokyo are being consumed at home. This consumption is at Australian beef's cost," say Australian Bureau of Agricultural and Resource Economics (Abare) analysts.

"Our beef exports to the US have been affected," says Mr Truss.

Also, Australia is not sure when Japan will lift the ban on US beef. "As and when that comes, we will have problems again," say Abare analysts.

Australia is sure of what it is doing. "It takes time to change feed management practices. And by that time, the ban could go," the analysts say.

Therefore, Australia is more concerned than the US over the removal of the ban. That, industry players, agree, will be for the good of both the exporting nations.

All about marbling

MARBLING is a trade parlance in the beef industry for cuts or pieces that have a good fat content. The fat content will be visible in the middle of the pieces in white colour.

"Japanese simply love marbled pieces," says Dr Barnard.

Only the US specialises in supplying the marbled single cuts.

To get the marbled cuts, cattle farmers have to prepare at least six months before the cow can be slaughtered.

The cattle that are selected for marbling are fed on grains against the normal hay or grass feeding. Since the cattle are grain-fed, they tend to put on weight as they accumulate more fat.

"The cattle will have to be fed on grains at least for 100 days for marbling," says Dr Barnard.

Why the name marbling? That is because when the cattle is slaughtered and cut into single slabs, the resemble much like a marble.