SOURCE: Rita Jane Gabbett, MEATINGPLACE, 2/1/16

The United States is at risk of losing $100 million in beef exports to Japan as a result of the trade agreement Japan and Australia signed last year, according to USDA’s Economic Research Service.

In a report titled “Tariff Reforms and the Competitiveness of U.S. Beef in Japan” the agency noted that although Japan’s ground meat markets are supplied overwhelmingly by Australian frozen beef and Japan’s offal imports are an area of particular U.S. strength, Australian and U.S. beef cuts compete strongly in Japan’s market.

The Japan-Australia Economic Partnership Agreement (JAEPA), which took effect at the beginning of 2015, provides tariff reductions for Australian beef that are phased in over a 15-year period. USDA evaluated the full implementation of JAEPA in comparison to recent trade conditions.

“Assuming that no other events intervene to influence trade, the scenario indicates that imports of Australian beef would rise by $100 million over baseline values, while imports of U.S. beef would fall by about $100 million,” the report concluded.

However, if Japan opens up its beef market to the United States as it did with Australia under JAEPA, USDA projected a $130 million net gain for U.S. beef, about 8 percent of current U.S. beef exports to Japan.

Japan currently supplies less than 40 percent of its beef demand through domestic production sourced from three components: wagyu beef animals, dairy (Holstein) beef animals, and a herd sired by wagyu and birthed by Holstein that blends characteristics of the two parent types.

Japan’s beef market as a whole is highly segmented, with very expensive, high-quality uses, such as the wagyu beef, at one end of the price spectrum, and ground beef preparations like hamburgers at the other.

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