Harris beef is first into reopened Japanese market

Issue Date: January 18, 2006

By Jim Morris

Rancher John Harris is well positioned to capitalize on the newly reopened Japanese market.

After a two-year hiatus, beef is again being served in Japan, and a prominent California beef producer said he hopes this signals still greater overseas access for one of the state's big agricultural exports.

"It's great for us to get back in Japan again," said John Harris, president and chairman of the board of Harris Ranch. "That was a major export market for the whole United States and for us, so we're really happy about it."

Harris has reason for elation. When his firm air shipped 40,000 pounds of beef to Japan last month, it was the first export of its kind from the United States to the Asian nation since December 2003, when a ban was announced following the discovery of a single case of bovine spongiform encephalopathy in Washington state.

"We're uniquely positioned because we have about 50 percent of our cattle under 20 months of age, which is what the requirement is," Harris said. "It gives us a good advantage over many other packers in the country."

Another positive is that the Japanese enjoy cuts of beef such as short ribs, tongue and liver that have traditionally not sold as well in America.

Fresno County-based Harris Ranch includes a 700-acre feedlot with 100,000 cattle in Coalinga and a packinghouse near Selma that has 800 employees. Eight hundred cattle are processed every day, with the beef shipped to customers across the United States and internationally to clients ranging from supermarkets to the In-N-Out Burger chain.

Harris Ranch has been exporting nearly 5 percent of its production to Japan since the market reopened, with weekly shipments recently upped to about 60,000 pounds.

Harris cited a tariff ranging from 38.5 percent to 50 percent as one obstacle to expanding sales to Japan. This issue is on the to-do list for U.S. trade negotiators.

Harris said he wants to go to Japan, South Korea and perhaps parts of China to stimulate exports.

"There is a real link formed by actually meeting with someone and getting a sense of what they're like, what their business is like and what their customers may prefer," he said. "There are a lot of little things that come out just by spending some time with somebody that you can't really do other ways."

Thailand and Hong Kong have recently reopened for U.S. beef, and renewed sales to additional Asian nations may soon follow. Nations currently banning American product include mainland China, Taiwan and Malaysia and South Korea. Significant progress was reported last week when the governments of the United States and South Korea agreed on an initial protocol to resume some imports of American beef.

One person in the business said the opening of the South Korean market could provide a major upside to California producers.

"We face some unique challenges in Japan that we will not 1ace in the South Korean market," said California Cattlemen's Association Executive Vice President Ben Higgins. "There is a distinct possibility that South Korea could eclipse Japan as the No. 1 export market for California beef."

An expanded customer base provides good news for California beef companies and ripples through the state's economy.

California beef and beef product exports totaled $215 million in 2003, the ninth most lucrative agricultural export from the state. Based largely on the ban following the discovery of BSE on U.S. soil, exports sank 63 percent in 2004, to $80 million.

"California needs exports," Harris said. "It's disappointing that sometimes the U.S. is in a deficit position on food products, being a net importer. You always think of America as a major, net exporter. Losing the beef market to Japan was one of the things that got us into the deficit position. It's definitely a help to California and the national economy to get this reopened."

Harris said the expanded export opportunities should bring a good year for beef packers and part of the feed industry, which were financially challenged in 2005.

Greater overseas sales prospects have added to the optimism of cattle ranchers, who have seen record commodity prices and unprecedented domestic demand in 2004 and 2005.

"Domestic supplies are increasing, but there's no question this will be another strong year for California cattle producers," Higgins said.

Those in the business of beef know what goes up must eventually come down, and that profit-filled days may give way to tighter margins.

"Ours is a cyclical commodity," said Holly Foster, spokeswoman for the California Beef Council. "As the cattle cycle and herd inventory shifts and producers start to expand herds by retaining more females, that means more cattle and beef to market. Export markets are extremely important for all producers, because they help maintain an acceptable level of profitability for the industry."

(Jim Morris is a reporter for Ag Alert. He may be contacted at jmorris@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item. Top