041047 Tyson Says Resuming Japan Beef Trade May Take Months

Springdale, AR - U.S. beef exporters may take at least six months to begin winning back the $1.7 billion sales to Japan because of restrictions imposed by the country in agreeing to ease a 10-month import ban, a Tyson Foods Inc. official said.

Japan on Oct. 23 agreed to a framework to end the ban, introduced after the discovery of mad cow disease in the U.S. Japan's approval process and the need for U.S. exporters to verify the age of their cattle mean little U.S. beef will appear in Japan before spring, said Takamichi Tawara, head of the Tokyo office of Tyson Foods, the world's biggest meat processor.

``Considering the time needed to obtain domestic approval, we expect to have to wait until March or April'' for the trade to resume, said Tawara. Gary Mickelson, a spokesman for Springdale, Arkansas-based Tyson Foods, wouldn't comment on when beef shipments to Japan may restart.

The delay is a boon for Australian ranchers that captured 91% of the world's second-biggest beef import market in the absence of their U.S. rivals. Australia, the world's top beef exporter by revenue, had 44% of the $2.3 billion Japanese market before the ban and the increased demand pushed the nation's cattle prices to a record last month.

Nippon Meat Packers Inc., Japan's largest meat processor, isn't expecting U.S. beef back in the country until next summer, while a full recovery in sales may take longer, said Yoshiki Hashimoto, a spokesman for the Osaka-based company.

``Consumers will be cautious about buying U.S. beef for a while,'' Hashimoto said in an interview. ``Sales of the meat won't return to pre-December levels immediately after the ban is lifted.'' Australia.

Beef sales in Japan have slumped this year. Consumption of both imported and domestically produced beef totaled 527,000 tons in the eight months ended Aug. 31, 44% less than the 936,000 tons consumed in the same eight months of 2003, Sydney- based trade group Meat & Livestock Australia said on its Web site.

``The U.S. won't get its market share back initially,'' said Don Mackay, chief executive of Australian Agricultural Co., the country's biggest rancher. ``They may never get it back.''

Meat & Livestock Australia, which markets beef in Japan on behalf of Australian ranchers, has hired celebrity TV chef Harumi Kurihara as part of its campaign to promote the nation's beef in 38,000 food outlets and 6,500 grocery stores, said Samantha Jamieson, the trade group's Tokyo-based regional manager.

``We're expecting the U.S. to mount a fairly vigorous campaign aimed at recovering lost market share,'' said Jamieson.

Japan's Agricultural and Health Ministries, which previously demanded universal cattle-testing for the disease, proposed last week to exclude cattle younger than 20 months old from testing for bovine spongiform encephalopathy, or mad cow disease.

Scientists say there's no evidence that cattle that young carry the disease, which has a fatal human variant.

``Ministries have to go through consultation with the Food Safety Commission and hold public hearings to explain the new domestic testing rules,'' said Tyson's Tawara.

Resumption of the U.S. trade may be delayed because the U.S. beef industry is domestically focused and doesn't have the systems in place to trace all its cattle and meat products to the degree that Japan requires, Mackay said.

U.S. meat accounted for about half Japan's beef imports last year. The ban drove up prices and cost local consumers about 273 billion yen ($2.6 billion), according to the UFJ Institute in Osaka. Shortages of beef caused first-half profit to fall 53% at Yoshinoya D&C Co., Japan's third-largest restaurant chain.

Yoshinoya bought 99% of the meat for its signature beef-bowl dish from the U.S. The U.S. has a bigger domestic market than Australia, allowing its exporters to supply greater volumes of select cuts of meat. Lack of supply forced the Tokyo- based company to stop selling its beef-bowl dish in February.

``We won't know when we can start selling beef bowls at our restaurants, because both countries have not agreed on how to verify the age of cattle,'' said Yasunori Yoshimura, a Yoshinoya spokesman.

Under the Japanese-U.S. agreement, cattle must have their age verified by either production records or a U.S. Department of Agriculture physiological grading system, details of which are the subject of a study that must be completed within 45 days.

Swift & Co., the third-largest U.S. beef processor, and most other U.S. meat processors estimate age based on when the animal forms mature teeth. The system isn't considered a reliable gauge because cattle can get their first permanent teeth anywhere between 18 months and 30 months.

The Japanese agreement will result in better keeping of birth records as ranchers strive to comply with Japan's standards, said Jim Herlihy, a spokesman for Swift

``It's hard to say how long that might take,'' Herlihy said. Meat exports accounted for about a fifth of the Greeley, Colorado-based company's sales of $9.9 billion in the year ended May.

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