Beef Trade with Japan

U.S.–Japan Beef Trade—Japan is the top importer of U.S. beef. In 2001, Japan absorbed 40 percent of total U.S. beef and beef variety meat exports on a volume basis and 48 percent on a value basis. Following the discovery of BSE (bovine spongiform encephalopathy) in Japan in September 2001, beef consumption plummeted and U.S. beef exports to Japan dropped. U.S. total beef exports to Japan fell more than 6 percent in volume from 2000 to 2001. In 2002, only 27 percent of U.S. beef exports by volume went to Japan, and Mexico became the largest importer of U.S. beef by volume, although Japan remained the top importer by value. Consumption of beef and demand for imports are expected to recover in 2003 as concerns over the safety of beef are alleviated. USMEF statistics for the first five months of 2003 indicated a 9 percent increase in volume and a 30 percent increase in value of U.S. beef exports to Japan and once again listed Japan as the leading market for U.S. beef. A recovery in import levels, however, may trigger higher import tariffs (see trade policy issues below), slowing growth by raising prices of imported beef (USMEF 2003g).

Market Share—In 2002, the United States was one of two major exporters of beef to Japan, competing primarily with Australia. Prior to the incidence of BSE in Japanese cattle in 2001, imports of fresh/chilled, frozen, and processed beef in 2000 totaled 740,592 metric tons (approx.814,651 U.S. tons). These levels declined to 495,660 metric tons (approx. 545,232 U.S. tons) in 2002. The primary beef export from the United States was frozen beef at 137,020 metric tons (approx. 150,722 U.S. tons). The United States was the top exporter in that category, followed by Australia at 92,115 metric tons (approx. 101,326 U.S. tons). The ranking of the two countries was reversed in the export of fresh/chilled beef, with Australia leading at 138,385 metric tons (approx. 152,223 U.S. tons) and the United States in second at 89,480 metric tons (approx. 98,942 U.S. tons). The United States and Australia also accounted for about three-quarters of the relatively small amount of processed beef imported by Japan in 2002. From 1995 through 2002, the overall U.S. market share in Japan of fresh/chilled, frozen and processed imports has been steady, fluctuating between 46 and 49 per cent (USDA/FAS 2002g).

"Desire Beef" Campaign—In March 2002, the U.S. Meat Export Federation (2002a) launched a campaign in Japan to “deliver messages of safety, taste and nutrition directly to the Japanese consumers,” with three American wives and mothers as spokespersons. The campaign followed the discovery of BSE in Japanese cattle in September 2001, and the subsequent drop in Japanese consumption of “30 to 50 percent at both retail and restaurant levels.” Sales of U.S. exporters in the first quarter were down as well by 30 to 35 percent from a year earlier. The full-scale campaign was to run in newspapers in March and April 2002, in women’s magazines from April through June, and on television from April through September. The targeted group was “moms and children living at home.” The campaign was called “Aisareru beef” [desire beef] (USMEF 2002a).

In August 2002 (USMEF 2002b), Yu Hayami, a wife, mother and celebrity, became the spokesperson in Japan for the campaign to carry the message “woman-to-woman.” Part of the campaign also included the publication of 98-page color cookbook, “American Beef Cooking: Yu Hayami’s Party Recipes and Daily Menu,” which sold for about US$7.50 and was available at more than 3,000 bookstores in Japan. The “aisareru” campaign was expected to continue beyond September 2002 into 2003, but at lower budget levels, and with more focus on public relations, in-store promotions and special events (USMEF 2002c).

Trade Policy Issues—Beef trade policies have at times been the subject of disagreement between Japan and the United States. Prior to 1978, when the USMEF opened an office in Tokyo, only about 10,000 metric tons (approx. 11,000 U.S. tons) of beef per year were being shipped from the United States to Japan, due to quota limits (Longworth 1983:48-49). In 1988, the United States and Japan signed a trade agreement in which Japan agreed to eliminate quotas and reduce tariffs on beef beginning in 1991. By 2000, U.S. beef exports to Japan peaked at approximately 360,000 metric tons (approx. 396,000 U.S. tons) before dropping in 2001 after the discovery of bovine spongiform encephalopathy (BSE) in Japan.

To protect Japanese domestic producers, the 1988 trade agreement included a safeguard “snapback” provision. If imports increase more than 17 percent over the same period in the previous year, the tariff on beef imported to Japan will increase from 38.5 percent to 50 percent for the remainder of the year. Due to the dramatic decrease in beef imports during 2002, import levels in 2003 may trigger this “snapback.” The Japanese government has already implemented the safeguard tariff measures for chilled beef as of August 1, 2003 (FAS 2003). Tariffs for frozen beef have remained at the normal level. Both beef industry representatives from the United States and the hotel and restaurant industry in Japan have protested against this policy, arguing that the current situation is exceptional and should not be handled as the type of import surge the snapback provisions were designed to address. The protocol does not include offal, which constitutes a large part of the U.S. export market of beef to Japan and would not be affected by the increase in tariff (FAS 2003b; National Cattlemen’s Beef Association: March/April 2003:20).

A current issue of concern between the United States and Japan is the worldwide discussion on the traceability of livestock from origin to sale. In the United States, the 2002 farm bill (Farm Security and Rural Investment Act of 2002) established mandatory country-of-origin labeling (COOL) on beef, pork, lamb, fish, peanuts, and other products, to be implemented nationwide on September 20, 2004. Under COOL requirements, only beef from cattle born, raised, and processed in the United States can be labeled "Product of USA." The COOL requirement in the 2002 Farm Bill excluded beef exports, as well as food service establishments, small retailers, and processed meat products (Rosson and Adcock 2003).

While the benefits and costs of implementing COOL for domestic sales continue to be debated in the United States, labeling the origin of beef products for export acquired intensified urgency after the discovery of a case of BSE in a cow in Alberta, Canada, in May 2003. Japan immediately banned the import of beef and cattle from Canada, and the United States and other countries quickly followed. Due to the significant number of cattle from Canada already in the United States, the Japanese expressed great concern that beef imported from the United States might include Canadian beef. While Japan had already implemented a place-of-origin labeling requirement for retail beef in 2000, the requirement included exceptions such as sales in the food service industry (Peterson 2002:1,16). Subsequent to the ban on Canadian beef, the Japanese government ruled that, as of September 1, 2003, all beef imported to Japan must include country-of-origin certification. In response, the USDA established the Beef Verification Program (BEV), which was formally accepted by Japan for the certification of fresh meat products. The program entails strict audits of U.S. beef exporters to ensure that all beef certified for export to Japan is from U.S. cattle. Beef exporters must maintain records on the origins of all beef for export to Japan. The program may also be extended to beef exports to Korea in the near future (Forbes 2003).

Kansas beef on sale in Osaka, Japan, under sign reading "Beef from KANSAS." photo courtesy of U. Minnesota LCTL virtual photo album

Kansas–Japan Agricultural Trade—Agricultural products figure prominently in Kansas exports to Japan. The combined totals of food manufacturing ($582 million) and agricultural crops ($297 million) amount to almost 81 percent of the exports from Kansas to Japan (KDOC 2002a). In 1999, Japan’s share of Kansas’ total exports of crops and processed foods was about 39 percent. In 2002, this percentage had remained steady, at about 40 percent. Thus, while exports from Kansas to Japan declined slightly from 2001 to 2002, the importance of Japan as an export market for Kansas agricultural products has not diminished since 1999.

Kansas Exports to Japan—Kansas Export Statistics are evidence of the strong economic connection between Japan and Kansas. In 2002, Japan accounted for 18.8 percent of all exports from Kansas. The value of exports to Japan rose from US$948 million in 1999 to almost US$1.2 billion in 2001 (KDOC 2002a).

Kansas–Japan Beef Trade—Kansas beef exports to Japan during the past few years have been consistent with the pattern of beef exports to Japan from the United States as a whole. Kansas beef exports to Japan peaked in 2000 at over US$412 million. After the BSE scare in late 2001, Kansas beef shipments to Japan dropped by over 17 percent in 2001 and by another nearly 30 percent in 2002. Year-to-date figures for 2003, however, show an increase of over 22 percent (MISER).

Chilled and frozen boneless beef were the two largest commodity groups exported to Japan in 1999, accounting for nearly 82 percent by value of all Kansas beef exports to Japan that year. Muscle meat, both chilled and frozen, has continued to dominate Kansas beef exports to Japan, but variety meats, particularly frozen tongue and frozen offal, are also exported from Kansas to Japan in significant amounts. Frozen tongue shipments in 2001, for example, totaled over US$49 million (MISER).

Several companies process beef in Kansas for export to Japan. Excel's plant in Dodge City, for example, tailors products for Japan with specific cuts and packaging. The boxed beef is loaded into refrigerated containers and trucked to the west coast for shipment to Japan. In Japan, Excel markets beef via Daiei Inc., a large meat importer. According to Excel, doing business in Japan “means special cuts of beef and pork that meet the exact requirements of the Japanese market. Our plants in Colorado and Kansas package sirloin steaks, chuck roll and tenderloin under the ‘Kansas beef’ label for Daiei supermarkets, Japan’s largest retailer. ‘Spencer 86’ and Excel’s premium brand, ‘Sterling Silver,’ are other favorites in Japan” (Excel 11-12).

In addition to the marketing activities of private corporations, as well as the efforts of the federal government and national trade organizations such as USMEF, the Kansas Department of Commerce (KDOC) has been active in developing connections between the state’s beef industry and Japan. On a 2002 trip to Japan, Governor Bill Graves met with Japanese restaurant and store owners and, assisted by the KDOC, hosted thirteen Japanese beef industry representatives at a Tokyo steakhouse that features Kansas beef. The KDOC representatives were joined by the CEO of U.S. Premium Beef and the president of Farmland National Beef Japan, Inc. to discuss issues of beef safety and quality (KDOC 2002b:3).

Nancy Kassebaum Baker, former Senator from Kansas, has also promoted Kansas beef in Japan as wife of the American Ambassador to Japan, Howard Baker. Earlier this year, she promoted beef in Tokyo by preparing American-style tables that held roasts and pot pies. She acknowledged that having a ranch in Kansas with 300 head of cattle made her “a little partial” to beef (Associated Press 2003a).