Would an American consumer pay $50 for a chicken with a serial number? Most probably would not, even though the supply of French “Label Rouge” chickens is insufficient to meet the demand and French consumers don’t blink an eye at the price. Would an American consumer pay $50 per pound for a steak? Most probably would not, even though the supply of Japanese Kobe beef is insufficient to meet the demand and Japanese consumers gobble it up. Consumers bought one million servings of US beef from a Japanese restaurant chain within 10 hours after beef shipments resumed last July, and grocery meat cases cannot get enough US beef to meet the demand. However, our sales of beef to Japan are minimal. What’s wrong with this picture?

The Japanese ban on US beef began in late 2003, when a Canadian cow wandered into a beef processing plant, after making a three week stop in a Washington State feedlot, and the cow was found to have BSE when it was slaughtered. Poor cow and poor cowboys. There was no smoking gun, but there was enough manure on our boots to find the US beef industry guilty and the penalty has been paid by everyone in the beef production chain. Other Asian markets closed their gates on US beef and exports dried up like a West Texas creekbed in August. But when there is consumer demand and a supply to meet that consumer demand, what is a cowboy to do?

In a study by Roxanne Clemens, published in the Iowa Ag Review, entitled, After the Ban: U.S. Beef Exports to Japan Lag Demand, Clemens indicates, “Importers were expressing frustration that they were unable to obtain enough U.S. beef to meet demand, even at the very low volumes needed for a slowly expanding, very cautious market.” The consumer demand for US beef was a bit surprising, since surveys indicated consumer reluctance toward purchasing the product because of questions about food safety and the lack of a verification system that could track the product from animal to consumer. Such a system is used for Kobe beef (and is the basis for the “Label Rouge” poultry) and the Japanese consumers were expected to look for it. Clemens says the survey data and the media castigation of US beef led marketers to stock very little US beef and the detailed inspection, shipment, and delivery system had not been ready for volume demand. In the four months following the lifting of the ban, the meat from about 30,000 animals was all that was in the pipeline to feed a population of 127 million people. Roughly calculated, that is 1/100 of a pound per person.

Japanese restrictions only permit the importation of meat from livestock under 20 months of age. Beef producers can certify age of their livestock “in a USDA-approved Quality System Assessment (QSA) program or Process Verified Program, or cattle can be determined to be A40 physiological maturity or younger through an official USDA evaluation using the U.S. Standards for Carcass Beef and the description of maturity characteristics within A maturity.” What is the live age of the animals providing the meat found typically in a grocery store? Clemens says surveys have found the average age is 16-17 months, and 97% are under 20 months. However, only 5% of the animals have the QSA certification, meaning 95% could be shipped to meet the Japanese demand but are not eligible. Additionally, some processing plants approved for export to Japan were not shipping beef there and some meat eligible for export was not being shipped. Clemens says, “Industry experts estimated that around 3 percent of U.S. beef could potentially qualify for export to Japan when U.S. beef was allowed re-entry into Japan in July 2006. Thus, although the United States is producing vast quantities of the age and type of beef demanded by the Japanese market, Japanese importers have been unable to source enough eligible beef.”

Economist Clemens says the age of cattle entering the slaughter process will not change much, but their eligibility to enter the high value export channel can increase with the participation by livestock producers in the age verification program. The Japanese government says it will not consider increasing the age restriction, but will conduct audits of the present system to determine its performance, and that process could take some time. The Japanese companies which import US beef find consumers uninterested in commodity beef that only meets the age standard, but quite interested in the beef that has a traceable history. And restrictions that limit export to certain cuts of beef will only allow increased export volume if the number of eligible cattle can be increased.

What is included in the identification system? Clemens says each animal at birth is double-tagged with a 10-digit identification number. “The ID number can be used to view production information via the Internet at any time during the animal’s life and is labeled on meat sold in supermarkets. Using the number, producers and consumers can obtain such information as the animal’s birth date, sex, breed, place of birth, calf producer’s name, dates of movements to different facilities, and harvest date. Cellular phones with Internet access capabilities have increased the accessibility of the database because a computer is no longer required to view the data.” Subsequently, a Japanese consumer, wanting a prime cut of beef, can enter the tag number in a cell phone and instantly know the history of that animal, and is more willing to pay a premium value for that piece of meat.

Summary:
Although Japanese consumers are willing to pay premium prices for US beef, the supply just does not exist in Japanese markets because of restrictions that limit imported meat to age and type of cut. US meat packing plants could fill more orders for the meat, and potentially bid up market prices, if there was a larger availability of animals that were registered into a USDA age verification program. Such a program permits the tracking of a piece of meat back to a specific herd, satisfying Japanese consumer desires for information about the history of the animal.