US export pain eclipses Asia gain for beef farmers

New Zealand beef farmers should be more worried about export prices in North America than any price-rise bonanza from Asian markets, says the head of a leading meat company.

The single case of bovine spongiform encephalopathy (BSE) in Washington state last week is bad news for exports to the United States of New Zealand "manufacturing" beef used in hamburgers, Anzco chairman Graeme Harrison said.

"Farmers should be looking more at what is happening in North America than North Asia - that's the biggest influence [on prices]."

Early indications suggested live cattle prices would fall at least 10 per cent in the United States.

With 90 per cent of its beef exports wiped out in just three days, the US stands to lose at least US$6 billion ($9.46 billion) a year in exports and through falling domestic prices because of the sick cow.

Harrison said New Zealand exports would not be immune from the price drop.

"Americans won't differentiate between domestic and imported [meat]. If anything, there is a strong bias to domestic beef."

Anzco's New Zealand beef operations include two Riverlands plants in the North Island and three plants in the South Island. It's the only beef operation to cover both islands. Anzco also has Canterbury Meat Packers and Five Star Beef.

In total it has a turnover of more than $900 million and 2000 staff.

Harrison could not say how far meat prices would drop in the US, although they had been good in recent months.

Prices for imported bull beef in the US were 125USc a pound last month, up more than 30 per cent in a year.

Prices for domestic US prime beef cuts had been at record levels, with a shortage of grain-fed product for restaurants, partly because of a BSE case in Canada in May.

More than half of New Zealand's beef exports go to the US and Canada - about 70 per cent of the $1.7 billion total export trade.

Harrison said it was too early to say if New Zealand farmers would get an overall benefit or loss.

It would be a net positive for some companies that concentrate on North Asia, he said, though North America was the biggest market for every company.

Japan and Korea have now banned US beef, joining more than 20 other countries.

Thirty per cent of Japan's beef supply was shut off overnight by the ban on US beef, which is mainly eaten in restaurants and hotels.

New Zealand is the fourth-largest supplier to Japan, well behind Australia and the US. Canada was beating New Zealand as a supplier to Japan until the BSE case in Alberta this year.

New Zealand exported more than 46,600 tonnes of beef and veal to North Asia last year - a fifth of the amount sent to North America.

Harrison said New Zealand would now have opportunities to sell more of its beef in Korea, Hong Kong, Taiwan and even Mexico, which had also barred US beef imports.

But Japanese tended to eat "grain-fed" beef, not grass-fed, so Australia stood to gain first with its feedlot industry.

"But there could be the potential to get more interest in grass-fed product [in Japan]."

- NZPA