print
print

Opportunity: | Bans of EU-produced beef resulting from the BSE crisis in Euro…

Opportunity:

Bans of EU-produced beef resulting from the BSE crisis in Europe have created opportunities for U.S. beef exporters in select markets.

Primary Target Markets:

Egypt and Saudi Arabia

Secondary Target Markets:

Philippines, Other Middle East countries, Possibly Russia, Central and Eastern Europe

Summary:

More than 50 countries have placed full or partial bans on imports of EU beef and beef variety meats due to the current BSE crisis in Europe (see below).  These bans create a potential market of more than 275,000 metric tons (based on average annual exports from 1997 to 2000) worth nearly $450 million.  The countries with EU beef imports bans account for 85% of EU beef exports. The following list is not meant to be exhaustive.

Full Bans: Australia, Belarus, Brunei, Bulgaria, Cambodia, Cameroon, China, Croatia, Czech Republic, Egypt, Equatorial Guinea, Estonia, Ethiopia, Indonesia, Ghana, Iran, Japan, Laos, Malaysia, Myanmar, New Zealand, Nicaragua, Saudi Arabia, Slovakia, Turkey, USA, Vietnam, and Yemen.

Partial Bans Amounting To Full Effect: Algeria, Bahrain, Bosnia, Brazil, Gabon, Hungary, Israel, Jordan, Kuwait, Lebanon, Libya, Lithuania, Mexico, Oman, Philippines, Poland, Peru, Singapore, Thailand, Tunisia, UAE and Ukraine.

Partial Bans Without Much Effect:

Russia: has banned only certain regions of a few EU member states, these exports account for 15% of Russian imports.  Morocco: banned six EU countries and Switzerland, but not France/Germany, its biggest suppliers.  Qatar: did not ban largest supplier – Germany.

 

 

Situation Analysis:

See attached tables for EU exports volumes/values to affected countries and the EU market share in the target markets.

Key Issues:

1.      How long will the bans remain?

a.      The bans are likely to remain in effect for at least six months, but possibly much longer.

2.      How will the BSE crisis affect beef consumption in target markets?

a.      Beef consumption currently down 25% EU-wide, expect average reduction of 10-12% in 2001 compared with 2000.

b.      Anecdotal evidence suggests beef consumption affected in Central and Eastern Europe, the Middle East and parts of Asia.  The fall varies country by country.  In the Middle East beef is being labeled to assure consumers of country of origin.

3.      What is the capacity of the U.S. beef industry to fill the void created by the EU ban?

a.      Saudi Arabia, Egypt and other Middle East countries have strict regulatory regimes (i.e. Halal) that have created problems for the industry in the past.

b.      Saudi Arabia, Egypt and other Middle East countries have not been traditional markets for U.S. beef, so developing expanded trade contacts may take time.

c.      Political unrest in Middle East has created anti-U.S. sentiment in some countries.

d.      The US has a limited number of plants approved for beef exports to the EU.  Obtaining EU approval generally takes 45-60 days.

e.      The U.S. faces stiff competition in all markets:

                                                   i.      Australia and Brazil have a strong presence in Saudi Arabia, Egypt and other Middle East countries. However, the current FMD outbreak in Brazil restricts their ability to export.

                                                  ii.      South America has targeted the EU for increased exports.  However, the EU has stopped Argentine imports due to an FMD outbreak in Argentina.

                                                 iii.      Australia has a strong presence in the Philippines.

                                               iv.      Given current exchange rates, the U.S. is most competitive in commercial quality cuts and some underutilized items (e.g. round cuts and briskets).

f.       Will Russia institute an EU-wide ban?

                                                   i.      Since 1997, Russia has accounted for 42% of EU beef exports, EU market share equals 50%.

                                                  ii.      Has currently banned beef from certain regions of several EU countries (most importantly Ireland and France) due to BSE.

                                                 iii.      Recently banned all imports of EU meat due to the FMD outbreak in several member countries.

                                               iv.      The first U.S. items that are likely to benefit are 50 CL trimmings, and then short plate.  Any substantial shift toward other cuts would likely require the stimulus of a weaker dollar given Russian buyers’ current price points.

4.      What are other possible effects of the BSE crisis?

a.      EU Pork Exports

                                                   i.      Production set to fall slightly this year (from 17.6 million metric tons to 17.4 mmt).  Pork consumption is expected to be strong, increasing the price of EU product on the world market.

                                                  ii.      Given the costs of the EU-wide BSE cull (estimates range from US$1-2 billion) and the FMD eradication programs in several countries, the EU may not be able to subsidize exports of pork.

                                                 iii.      EU pork is also likely to become more expensive because of the Meat and Bone Meal (MBM) ban raising feed costs, and the exclusion of bones turning a revenue earner into a cost center.

                                               iv.      The FMD outbreak in Europe increases the uncertainty about the level of external EU pork trade over the next 6-12 months.

 

U.S. Is BSE Free: BSE is not known to exist in the United States, and the United States satisfies the criteria set by the Paris-based Office of International Epizootics (OIE) to be recognized as a BSE free country.

 

The U.S. Department of Agriculture has conducted a BSE surveillance program in the U.S. for 10 years and has tested over 12,000 brain specimens from cattle displaying any neurological symptoms and from non-ambulatory animals (downer cows) that might indicate BSE. No cases have been found.

 

The overall level of U.S. surveillance is five times the level of the standards set by the OIE. For more information, go to www.bseinfo.org or http://www.aphis.usda.gov/oa/bse/ for additional information.

 

Other Resources:

Website with basic information on BSE: http://www.bseinfo.org/

Primary Contact(s):

Richard Ali, London, EU@usmef.org
Michael Zerr, Denver, mzerr@usmef.org
Lynn Heinze, Denver, http://www.usmef.org/WINDOWS/Temporary%20Internet%20Files/OLK7373/lheinze@usmef.org

Paul Clayton, Denver, http://www.usmef.org/WINDOWS/Temporary%20Internet%20Files/OLK7373/pclayton@usmef.org

Tom Lipetzky, Denver, tlipetzky@usmef.org

 

Table 1: EU Beef Exports to Target Markets

Average Annual Exports: 1997-2000

Export Country

EU Exports

(MT)

EU Exports

(million US$)

Export Percent

By Quantity

Export Percent 

By Value

Total Non-EU Exports

645,148

$981.24

 

 

Russia

271,078

$359.59

42%

37%

Egypt

127,391

$176.92

20%

18%

Saudi Arabia

26,381

$51.10

4%

5%

Other Middle East

65,361

$131.01

10%

13%

Central & Eastern Europe

28,641

$41.89

4%

4%

Southeast Asia

18,242

$19.75

3%

2%

Other Countries with Bans

10,633

$28.94

2%

3%

Countries without Bans

97,421

$172.04

15%

18%

Total Banned

547,727

$809.20

85%

82%

Source: World Trade Atlas, USDA

Table 2: Beef Import Matrix for Target Markets

Import Market

Size (MT)

EU

EU Market

Share

USA

Australia

India

Brazil

Egypt

168,795

147,722

88%

6,674

1,901

6,764

1,200

Saudi Arabia

48,000

23,431

49%

420

1,135

2,917

Philippines

87,244

22,443

26%

1,199

16,352

41,041

731

UAE

52,142

6,667

13%

788

902

36,500

543

Russia

380,000

178,000

47%

50,000

3,000

Data for Egypt, Saudi Arabia, and UAE is CY1999. Russian data is a CY2000 USDA Estimate. Philippines data is CY2000.

Sources: World Trade Atlas, USDA, and USMEF Research