Straggle Muster 163 - 15/7/2005
Andrew Burtt - Meat and Wool New Zealand in the USA
Media and cattle and beef industry activity spiked in June when the US confirmed its first case of BSE in a native-born Texas cow. That the sample, which was originally taken, tested and considered negative in November 2004 by the US Dept of Agriculture (USDA), is now considered a positive has led to many conspiracy theories about why definitive testing was not conducted eight months ago.
However, while many in the livestock and meat industry get nervous about such news, the average American consumer has not reacted to the announcement. In a consumer survey funded by the US Beef Board and conducted in the week after the announcement, 92% said they were confident that US beef is safe from mad cow disease. In these surveys, which are conducted regularly, consumer confidence has remained strong averaging 91% since the discovery of the first US case in December 2003.
Also, reports indicate that beef sales for the long weekend for the July 4th Independence Day celebration were strong, which is encouraging given there are some indications that consumers are wearying of record high beef prices.
New Zealand sheep and cattle farmers have benefited from the strong demand and record prices in US dollar terms. As you well know, the strength of the New Zealand dollar has prevented the full benefit being received in New Zealand.
US export markets were not as forgiving as the American consumer on BSE. A number of them have closed (again) their borders to US beef while others have said the second US case will prolong reopening of their market to US beef.
While USDA Secretary Mike Johanns is in China attending the WTO ministerial meeting next week he is going to take the opportunity to discuss the resumption of US beef trade with his counterparts from key markets such as Japan, South Korea and Taiwan.
Meanwhile, back in the US, activity has started on the next Farm Bill, which will come into effect in 2007. Feeding into the mix are pressures on the US budget brought about more by the tax cuts than by spending on the war in Iraq, reforms required to some programs such as the cotton to ensure they comply with the US's WTO obligations and an announced intention by the Bush Administration to eliminate trade-distorting domestic support as a result of the WTO Doha Round, and importantly, if the EU does likewise.
One area of agriculture that has recently gained increased focus is biodiesel, which many perceive would solve some of the challenges facing the US at present. It is a cleaner burning fuel, it would reduce the US reliance on foreign oil, it might provide some conservation benefits, and as an industrial product that would appeal to many farmers in the event their support were reduced if and when the WTO Doha Round and the Farm Bill are implemented.
The whole Farm Bill debate will be one to watch because there will be some interesting developments as various agriculture industry alliances form to lobby on Capitol Hill.
Finally, I recently had the pleasure to meet up with a group of Southland farmers traveling through the US and Canada. They were having a great trip and getting a much better understanding of the huge size, complexities and culture of the US market and US agriculture. They were having a great time too.
Andrew Burtt is Meat and Wool New Zealand's North American Manager, based in Washington DC.
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