1.
Developing the market for U.S. beef in Japan
2.
Products for the Japanese market
3.
The Japanese requirement for BSE testing
4.
Thoughts on the future: beef in Asian markets, the U.S.
beef industry
Developing
the market for U.S. beef in Japan
Willis: We think that there is
a real lack of awareness around Kansas about how important
Asian markets are, and we understand that you have made
quite a contribution to developing that market, particularly
in Japan, for American beef. I would love to hear just
how that came about. How did you first become aware
of the interest in Japan in American beef?
Fielding: Well, I’ve been going
to Japan for 25 years. I worked for Cargill for a long
time, back when we were first, as an industry, building
the market in Japan, getting our product over there.
I think that the Meat Export Federation has done a very
good job over the years. [The representative] speaks
fluent Japanese, has lived in Japan and, for the whole
industry, that organization has performed a very good
service. But back when people were first starting, it
was really small companies that started the business
in Japan. Then the bigger companies started to realize
how lucrative [the market] was and how it could grow.
IBP was probably the leader, as they were in the U.S.
[They were] quick to see that opportunity and to develop
products specifically for Japan.
The Japanese customer would come over. This was pretty
hard for the big packers especially. They needed to
accept that [the Japanese buyers] would come in to your
plant and be there on the line. You could learn a lot
of lessons from their attention to detail and the importance
to them of fitting with their requirements. And if you
did, you were able to profit from that. So, it was worth
while.
And the loyalty—the thing that is great, specifically
to Japan, is that their loyalty is just tremendous.
I know that from when I was with Excel, fighting that
competitively, because IBP was one of the first ones
and even though we knew and could show that our product
was every bit as good. For [products] like outside skirts
or hanging tenders, IBP could get five or 10 cents a
pound more than what we could at Excel for years. But
it was because that customer liked the consistency and
[after] [a Japanese buyer] initially says "great,
we'll buy this," then it takes [a competitor] a
long time to get that business away from someone who
has established that [relationship]. So, when you understand
that and deal with it, you just learn the lesson that,
you've got to respond to the customer and, if you do,
they will be a great customer for a long, long time.
W: What have you learned about
how to engender that kind of loyalty with Japanese customers?
What techniques have you used to develop those relationships?
F: Well, it's really pretty simple,
in that it takes a lot of time, but it's worthwhile.
You have got to establish the trust. You can't just
do something one time. You have to repeat it and repeat
it and repeat it. Whatever you agree to, that's what
you've got to do. The personal relationship is very
important. You build that trust level, but then the
product has to perform. You can't just get it by strictly
personal relationships. You've got to combine [those
relationships] with great product, in the way that they've
asked for it, over a long period of time. You've always
got to be fair. That may mean that say, there [is] a
shortage of a product, where you could charge a lot
more money, but you develop a fair market premium for
what you're doing. That, too, is part of this. They
will pay a premium but they also, like anyone, would
not want to feel that they were being taken advantage
of. So, even right now, if the borders opened up right
away, we could probably charge a lot more than where
we would price the product, but we'd price the product
at a very fair price, probably at an even lower price
than what they might be paying.
It gets involved too, in things like animal handling.
And that's becoming more important to the U.S. as well
but, [they want to know] that we're handling animals
properly, putting less stress on the animals, which
goes into the quality of the product. We are the only
plant in the country that I know of that has indoor
pens. We're certainly the only plant that only handles
one breed of cattle. [The cattle] can be crossbred,
but [they are] at least 50 percent or more Angus. So,
to have the quality of the product, every item, even
our offal items, are all consistently coming from the
same basic genetics. That's a plus—being able
to trace cattle back. In Japan you will see, [in retail
markets] they will show pictures sometimes of the ranchers,
of the farmers, so that [the shoppers] know that their
meat is coming from certain producers. You can also
see in this picture [taken in a retail grocery store]
the sign showing that the beef [for sale] is BSE-tested.
And here's what just kills me. They are giving away
free samples of Australian beef, so they can get the
consumer really liking Australian beef, so that when
we go back, it will take a really long time to get our
market share back.
In almost all cases, the Japanese ask for something
that they care about. They're very smart business people.
They know that doing extra things cost money and that
a processor has to get a return on that, but they know
that it's important to their consumers and their customers.
That's how they built their systems, [with] attention
to detail.
W: Do you have some long-term
friends in Japan, whom you have visited over there?
F: Yes, I do. I've had some to my
home, and in some cases I've been to their homes. But
I play golf with them, have a few beers with them. Fortunately,
drinking is not quite as predominant as it used to be,
but, yes, I have a lot of friends over there, and I
think very highly of them.
W: Do they visit here frequently?
F: Oh yes, what normally will happen
is that they will send in some of their representatives
to just take a look at the plant and what we're doing,
and then they'll go up another level. The first level
says this is a great product and we should follow up
on this. Then, they'll send one higher level that will
come in. They'll take a look at it and then usually
a third trip will take place, and then they will start
to buy product. They first get a sample, then a little
bigger sample. And in some cases they'll take frozen
product, then go to fresh product and just keep taking
those steps till it gets to just exactly where they
had in mind. And so, we started out [that way] at Creekstone.
It's been around four or five years. We were having
other plants process the product. And we were processing
at this plant right before [the plant was] closed [and
then purchased by Creekstone],…but it was just
a small fraction of what we are now selling. So, we
virtually started out from almost zero and built it
up to where we were doing thirty percent of our total
business in exporting, and almost half of that was to
Japan. So, in a matter of about eight or nine months,
we built up a tremendous business. You can only do that
if all the products are great and all the things we
talked about are done very, very well. So, we were feeling
great about it until December 23rd.
W: In addition to the processing
side of things, are the Japanese [buyers] also interested
in looking at production? Do they want you to take them
to ranches?
F: Yes, we have a nice advantage with
our farm in Kentucky that John Stewart started. We have
one of the best genetic experts in the country. We've
got a staff of people there who are doing the best work
in combining the best traits in the animal, not just
for the finished product, but for the cow-calf side,
the feedlot side of it, and the processing side of it,
so that we end up having an animal that's going to work
for the whole system and come up with a very high quality,
consistent product. That's where we take them and show
them how we work on that and what those judging factors
are. They can see the bulls; they can see the offspring;
they can see how we are working with feedlots and backgrounders
and how we get those animals. We either sell bulls or
we sell semen. Not all of the cattle we put through
are coming from that [breeding program]. That's our
long-term dream down the road, but our experts there
will work with other producers that have large operations
and help them. Or, [when] we identify a producer that
has cattle that similar to what we think are the best,
we try to track those cattle and place them in feedyards
that are closer [to us]. We take our Japanese customers
to farms, to feedlots, just trace the cattle all the
way through. Usually when they come over here, they
do a combination trip. They enjoy seeing it.
Next:
Products for the Japanese market
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