US re-entry to Japan to hit beef exporters

In a move which will hit New Zealand farmers in the back pocket, Japan is expected to lift a ban on US beef imports over mad cow disease this week.

The end of a two-year stand-off between Washington and Tokyo has local exporters concerned that the US will flood the Japanese market and bring a rapid end to strong beef prices they have enjoyed.

If the ban is lifted, US beef could be back in Japanese shops as early as the end of the year.

Japan banned US beef in December 2003 after the discovery of the first US case of mad cow disease, halting annual trade worth $1.4 billion ($1.98 billion).

New Zealand exporters have cashed in on the ban - which also affected US trade with Korea and Taiwan. Sales to those Asian markets have more than doubled.

New Zealand beef exports to Japan in the year to September 2004 were up 96 per cent by volume and 124 per cent by value. The market is now worth almost $250 million.

Exporters knew the boom could not last but are hoping that some of the market share gains will be retained as consumers have grown accustomed to New Zealand's grass-fed beef. Asian consumers have traditionally preferred US-style grain-fed beef.

The reintroduction of US beef comes at a difficult time. With the kiwi still close to record highs, any falls in the prices of key agricultural commodities will have an extremely negative effect on exporter returns.

The US has consistently maintained that its beef is safe, while Japanese officials have voiced concern that US procedures for monitoring cattle for BSE are ineffective.

A human version of the disease can be contracted by eating contaminated meat and is blamed for the deaths of more than 150 people worldwide, including one in Japan.

The Mainichi and Asahi newspapers said last week that Japan's Food Safety Commission had recommended lifting the import ban on cattle aged up to 20 months. Such animals are considered to be at low risk of having BSE.

- Liam Dann and REUTERS