News Update
June 15, 2005
K-State Economists Provide Further BSE Study Details
Details of a recent Kansas State University (K-State) study on bovine spongiform encephalopathy’s (BSE’s) economic impact on the U.S. beef industry suggests that average U.S. wholesale boxed beef prices during 2004 were 12¢-17¢ per pound (lb.) lower than they would have been if all export channels had been open.
The study, “The Economic Impact of BSE on the U.S. Beef Industry,” was released earlier this spring and provided an assessment of the economic effects of lost export markets and policy changes affecting cattle procurement and processing.
For example, the loss of export markets also meant that beef offal prices were lower than they would have been otherwise. As a result, K-State researchers estimated that total U.S. beef industry losses arising from the loss of beef and offal exports in 2004 ranged from $3.2 billion to $4.7 billion.
K-State Research and Extension agricultural economists James Mintert, Sean Fox and Ted Schroeder authored the study, along with research assistants Brian Coffey and Luc Valentin. The study was commissioned by the Kansas Department of Agriculture.
The economists recently outlined these further details from the study:
• U.S. beef exports were valued at $3.95 billion in 2003 and accounted for 9.6% of U.S. beef production.
• Within days of the late December 2003 news that a cow in Washington state had tested positive for BSE, a total of 53 countries — including such major markets as Japan, Mexico, South Korea and Canada — banned imports of U.S. cattle and beef products.
• The top five export markets for U.S. beef during 2003 were Japan (35% of export value), Mexico (23% of export value), South Korea (21% of export value), Canada (9% of export value) and Hong Kong (2% of export value). These top five markets cumulatively accounted for 90% of the value of U.S. beef exports during 2003.
• The import bans caused U.S. beef exports to drop. While some important markets, including Mexico and Canada, reopened in 2004, export quantities for the year declined 82% below 2003 levels.
• Talks are progressing, but the United States has yet to regain access to the Japanese and South Korean beef export markets. If the U.S. had regained access to these two key markets and exported the same percentage of U.S. production to them in 2004 as in 2003, wholesale revenue per head would have increased between $45 and $66 per head for every head harvested in the United States.
• The loss of export markets increased the quantities available on the domestic market, which depressed domestic prices below levels they would have attained if exports were possible.
• The two largest export categories — boneless fresh beef and boneless frozen beef — accounted for 59% of U.S. beef export value during 2003. With the addition of bone-in frozen beef, the top three product categories accounted for 68% of U.S. beef exports.
• U.S. exports vary, depending on the importing country. Boneless frozen and boneless fresh beef composed 78% of all beef exports to Japan in 2003. In contrast, 44% of U.S. beef export value to Mexico in 2003 was accounted for by boneless fresh beef, and 22% — the second largest category — by frozen beef tripe.
Some countries are a key outlet for certain products. Japan was an important market for beef tongues, accounting for 79% of the value of all U.S. beef tongue exports during 2003.
• A key component of the study was to estimate the effect that reduced exports had, in turn, on the U.S. beef market. The beef export reduction meant that U.S. consumers were faced with more beef at retail outlets than otherwise would have been the case.
The researchers developed a model that incorporated assumptions regarding domestic demand for beef and offal to estimate the price reduction linked to increased supplies on the domestic market. They used several elasticity estimates to gauge probable beef industry revenue losses. The results suggested weighted average wholesale boxed beef prices in 2004 were 12¢-17¢ per lb. lower than they would have been had export channels been open.
The K-State researchers’ report is available on the Web at www.agmanager.info/livestock/marketing/bulletins_2/industry/default.asp.
(This article provided by K-State Research and Extension.)
North Dakota Brand Renewal Begins
All livestock brands registered in North Dakota will expire Dec. 31, 2005, but owners wishing to renew their brands can do so beginning July 1, according to the North Dakota Stockmen’s Association (NDSA).
NDSA is issuing more than 22,000 renewal notices through the mail to current brand owners in July. Renewal notices will be customized for each brand holder.
To renew a brand, brand owners must complete the renewal form and remit the $25 per brand, per position, per species, renewal fee. For example, if you have a brand on the left hip of cattle, your fee would be $25. If you have a brand on the left and right hip of cattle, your fee would be $50. If you have a brand on the left hip of cattle and left hip of horses, your fee would be $50.
Unless the registered brand holder transfers the brand at an earlier date, renewed brands will be valid until Dec. 31, 2010. Producers who renew a brand before the Dec. 31 deadline will ensure a place in the 2006 North Dakota Brand Book, available for sale early February.
Contact the NDSA office at (701) 233-2522 or brands@ndstockmen.org to learn more about ownership rules and other brand-related restrictions.
Nebraska Packing Plant Closes
Packerland Packing has announced that it will permanently close its plant in Gering, Neb., the American Meat Institute (AMI) reported. Due to the plant closure, 205 employees will be laid off.
Steve Van Lannen, Packerland senior vice president, said, “We based our decision to close the Gering plant on the fact that procuring cattle to maintain production levels at this facility is a unique challenge, a situation largely due to the ban on importing cattle from Canada into the United States.”
To learn more about the ban’s effects on the processing industry, visit www.openbeefborders.com/economicimpact.htm.
Golf Tournament Nears
Remember, the Angus Foundation is hosting its annual Golf Tournament July 19 in conjunction with the National Junior Angus Show (NJAS) in Denver, Colo.
If you would like to play in the tournament or to be a tournament sponsor, please let us know by filling out the sign-up form available on the Angus Foundation Web site, www.angusfoundation.org, or by contacting Callie Meinhardt, Angus Foundation assistant, at (816) 383-5132.
June 15, 2005
K-State Economists Provide Further BSE Study Details
Details of a recent Kansas State University (K-State) study on bovine spongiform encephalopathy’s (BSE’s) economic impact on the U.S. beef industry suggests that average U.S. wholesale boxed beef prices during 2004 were 12¢-17¢ per pound (lb.) lower than they would have been if all export channels had been open.
The study, “The Economic Impact of BSE on the U.S. Beef Industry,” was released earlier this spring and provided an assessment of the economic effects of lost export markets and policy changes affecting cattle procurement and processing.
For example, the loss of export markets also meant that beef offal prices were lower than they would have been otherwise. As a result, K-State researchers estimated that total U.S. beef industry losses arising from the loss of beef and offal exports in 2004 ranged from $3.2 billion to $4.7 billion.
K-State Research and Extension agricultural economists James Mintert, Sean Fox and Ted Schroeder authored the study, along with research assistants Brian Coffey and Luc Valentin. The study was commissioned by the Kansas Department of Agriculture.
The economists recently outlined these further details from the study:
• U.S. beef exports were valued at $3.95 billion in 2003 and accounted for 9.6% of U.S. beef production.
• Within days of the late December 2003 news that a cow in Washington state had tested positive for BSE, a total of 53 countries — including such major markets as Japan, Mexico, South Korea and Canada — banned imports of U.S. cattle and beef products.
• The top five export markets for U.S. beef during 2003 were Japan (35% of export value), Mexico (23% of export value), South Korea (21% of export value), Canada (9% of export value) and Hong Kong (2% of export value). These top five markets cumulatively accounted for 90% of the value of U.S. beef exports during 2003.
• The import bans caused U.S. beef exports to drop. While some important markets, including Mexico and Canada, reopened in 2004, export quantities for the year declined 82% below 2003 levels.
• Talks are progressing, but the United States has yet to regain access to the Japanese and South Korean beef export markets. If the U.S. had regained access to these two key markets and exported the same percentage of U.S. production to them in 2004 as in 2003, wholesale revenue per head would have increased between $45 and $66 per head for every head harvested in the United States.
• The loss of export markets increased the quantities available on the domestic market, which depressed domestic prices below levels they would have attained if exports were possible.
• The two largest export categories — boneless fresh beef and boneless frozen beef — accounted for 59% of U.S. beef export value during 2003. With the addition of bone-in frozen beef, the top three product categories accounted for 68% of U.S. beef exports.
• U.S. exports vary, depending on the importing country. Boneless frozen and boneless fresh beef composed 78% of all beef exports to Japan in 2003. In contrast, 44% of U.S. beef export value to Mexico in 2003 was accounted for by boneless fresh beef, and 22% — the second largest category — by frozen beef tripe.
Some countries are a key outlet for certain products. Japan was an important market for beef tongues, accounting for 79% of the value of all U.S. beef tongue exports during 2003.
• A key component of the study was to estimate the effect that reduced exports had, in turn, on the U.S. beef market. The beef export reduction meant that U.S. consumers were faced with more beef at retail outlets than otherwise would have been the case.
The researchers developed a model that incorporated assumptions regarding domestic demand for beef and offal to estimate the price reduction linked to increased supplies on the domestic market. They used several elasticity estimates to gauge probable beef industry revenue losses. The results suggested weighted average wholesale boxed beef prices in 2004 were 12¢-17¢ per lb. lower than they would have been had export channels been open.
The K-State researchers’ report is available on the Web at www.agmanager.info/livestock/marketing/bulletins_2/industry/default.asp.
(This article provided by K-State Research and Extension.)
North Dakota Brand Renewal Begins
All livestock brands registered in North Dakota will expire Dec. 31, 2005, but owners wishing to renew their brands can do so beginning July 1, according to the North Dakota Stockmen’s Association (NDSA).
NDSA is issuing more than 22,000 renewal notices through the mail to current brand owners in July. Renewal notices will be customized for each brand holder.
To renew a brand, brand owners must complete the renewal form and remit the $25 per brand, per position, per species, renewal fee. For example, if you have a brand on the left hip of cattle, your fee would be $25. If you have a brand on the left and right hip of cattle, your fee would be $50. If you have a brand on the left hip of cattle and left hip of horses, your fee would be $50.
Unless the registered brand holder transfers the brand at an earlier date, renewed brands will be valid until Dec. 31, 2010. Producers who renew a brand before the Dec. 31 deadline will ensure a place in the 2006 North Dakota Brand Book, available for sale early February.
Contact the NDSA office at (701) 233-2522 or brands@ndstockmen.org to learn more about ownership rules and other brand-related restrictions.
Nebraska Packing Plant Closes
Packerland Packing has announced that it will permanently close its plant in Gering, Neb., the American Meat Institute (AMI) reported. Due to the plant closure, 205 employees will be laid off.
Steve Van Lannen, Packerland senior vice president, said, “We based our decision to close the Gering plant on the fact that procuring cattle to maintain production levels at this facility is a unique challenge, a situation largely due to the ban on importing cattle from Canada into the United States.”
To learn more about the ban’s effects on the processing industry, visit www.openbeefborders.com/economicimpact.htm.
Golf Tournament Nears
Remember, the Angus Foundation is hosting its annual Golf Tournament July 19 in conjunction with the National Junior Angus Show (NJAS) in Denver, Colo.
If you would like to play in the tournament or to be a tournament sponsor, please let us know by filling out the sign-up form available on the Angus Foundation Web site, www.angusfoundation.org, or by contacting Callie Meinhardt, Angus Foundation assistant, at (816) 383-5132.
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