European consumers, faced with dwindling beef production and greater dependence on South American supplies of lower quality meat, will stand to gain from more beef coming from American shores.
Buoyed by a cheap dollar, the United States is ambitiously hoping to double beef imports to the European Union from 6,000 to 12,000 metric tons of meat by end of 2008.
"We see Europe as a potential outlet and market for our producers and we're excited about it,bCrLf says Phil Seng (left), President of the U.S. Meat Export Federation (USMEF).
European Commission projects EU beef imports will be 350,000 metric tons this year and could climb as high as 750,000 metric tons by 2012.
Since 1989 U.S. beef imports to the EU have been stifled by a ban on cattle implanted with growth hormones. But today more U.S. cattle farms produce non-growth hormone beef specifically for organic markets. The EU market fits right in.
"We see a niche for the U.S. product and the U.S. producers who are producing untreated beef for natural programs,bCrLf says Seng. "There's more and more of that beef available in the U.S.bCrLf
Quota concerns If the U.S. does reach its 12,000 ton goal it would exceed the current annual EU quota of 11,500 metric tons. According to Seng, the duty is 20% up to the 11,500 ton level, and doubles above that. But it's the European consumer who pays for that increased price at the grocery store. Will they pay? Seng believes they will.
"We've been very successful already in putting our product in Germany, and also the dollar has dropped nearly 40% against the Euro,bCrLf he says. "It's much cheaper now for Europeans to buy our product.bCrLf
Consumers in the new EU member states in Eastern Europe have significantly lower per capita beef consumption compared to established countries like France and Germany. But rising purchasing power in those countries will stimulate consumption toward the EU average, more than compensating for the long-term gradual decline in consumption in established member states.
Meanwhile U.S. and EU officials have been quietly working on technical issues, such as how cattle are processed and how carcasses are rinsed, that need to be addressed before quota increases can be considered, Seng says.
U.S. beef exports to the EU from January through August totaled 4,554 metric tons, up from 2,066 metric tons over the same period last year.
Brazilian beef worries Brazilian beef exports to the EU have increased by 20% since 2003 and account for approximately 60% of all imports into the EU. But Seng believes there is potential for U.S. beef import growth because of growing fears over Brazilian beef imports.
Some EU farm organizations want a ban on Brazilian beef over suspicions the cattle are fed growth hormones and may come from FMD (Foot and Mouth Disease) infected regions. Many parts of Brazil cannot export beef due to FMD. The fear is that product from these areas could be exported and thus threaten European herds already ravaged by earlier outbreaks.
U.S. beef cannot compete with South American beef on price. Nonetheless, U.S. beef is a high quality product, and a significant proportion of EU consumers are ready to pay the price required to obtain consistent, high quality beef. This high quality, high-cost segment of the market will continue to grow, says a report by USMEF.
Slaughtering methods differ between the U.S. and EU, but there's also a lot of compatibility, says Seng.
"In order to be EU-approved there are certain requirements that meatpackers have to comply with, and that includes the U.S.-based packers,bCrLf he says. "This was a concern we had because in the old days those requirements were a bit onerous. The protocols might have made it impossible for us. But we feel our systems are very equivalent now. We're gradually becoming more accepted in Europe, and we're just beginning.
"This is a market with almost 500 million people, including wealthy countries with buying power and a tradition of consuming meat, so there's a lot of factors very much in our favor,bCrLf concludes Seng. "When you look at their buying power and infrastructure, it's very, very encouraging.bCrLf