Cattle producers and feeders can expect a nice premium for cattle that fit the new Japanese beef chain. But the industry hopes the route to get cattle verified and approved for Far East sales isn't like a slow boat to China.
That's not the case so far. Industry-leading such as the Texas Cattle Feeders Association (TCFA) and others, are working with feedyards, ranchers and, other suppliers to assure proper measures are met, and prevent the program from being Shanghaied.
After two years of no U.S. beef exports to Japan, the Japanese market reopened Dec. 12. The decision to allow U.S. beef products from cattle 20 months of age or less was a major step in refilling a void in U.S. beef exports caused by the December 2003 discovery of BSE in Washington state.
The market reopening was met with rejoicing from major restaurants and hotels in Tokyo, and other areas with a clientele that favors U.S. beef. But there are some strict Japanese government guidelines to meet before beef is eligible for consumption there.
You might say that not just any No. 1 Okie will work. But those that do, can expect up to a $25/head or more premium, says John Lawrence, Iowa State University livestock economist.
Ben Weinheimer, TCFA regulatory manager in Amarillo, began preparing early for the reopening of the Japanese market. TCFA worked with USDA to establish a plan through which TCFA's member yards could become quality system assessment (QSA) approved to supply the chain. The effort began early last fall in anticipation of Japan's 20-month age requirement.
There had to be assurances that beef headed to Japan complied with the Beef Export Verification (BEV) program requirements for that country. The primary requirement is verification that cattle are less than 21 months of age at the time of slaughter, or meet A40 standards for early maturity.
“To qualify under the BEV for Japan, producers and processors of any cattle that will provide beef for the Japanese market must participate in a QSA program or Process Verified Program (PVP) that has been pre-approved by USDA's Agricultural Marketing Service,” says Lawrence, who heads up the Iowa Beef Center.
Unlike country-of-origin labeling, which accepts an auditable record, Japan requires eligible cattle be raised by cow herds, backgrounders and feedyards qualified under a QSA or PVP program. Records documenting cattle age and signed affidavits by the producer are also needed, “but these alone are not enough,” Lawrence says.
With the need for additional record keeping and QSA verification requirements, some question whether there will be enough cattle early on to fill the demand for Texas T-bone's by folks dining while looking out at Mt. Fuji.
“That's yet to be seen,” Lawrence says. “Most believe it will take time to rebuild the Japanese market. Currently the supply of verified and A40 cattle is small. But it will grow as we enter late spring and summer.
“There will be more A40 as the calves come to market, and there will be more BEV- and QSA-verified cattle as producers learn and prepare for those requirements,” he adds.
An alphabet of certification
Tools are in place to get cattle PVP- and QSA-certified. But the alphabet of certification is quite new and involves various procedures on the part of feedyards, packers or others.
Many TCFA-member yards in Texas, Oklahoma and Mexico have taken steps to obtain QSA status. Weinheimer has headed TCFA's efforts to train feedyard operators to obtain proper cattle records from ranchers and other feeders, then audit feedyards to assure they, and their suppliers, are meeting the BEV guidelines.
“We've had a tremendous amount of interest from yards and held several training sessions,” he says. “Once we go to a yard and provide individual training for it, the yard management can then train and evaluate any suppliers interested in becoming QSA approved.
“When we return to conduct the QSA audit, the yard must have at least one pen of QSA cattle on feed and the proper documentation to assure all requirements are met,” he says.
A list of USDA-approved QSA programs can be found on the Web at http://www.ams.usda.gov/lsg/arc/qsap.htm.
While most of the companies approved to date are feedlots and packers, Lawrence says other members in the supply chain may offer a PVP or QSA, including animal ID companies.
According to USDA, the QSA program stipulates the documented quality management system requirements a company must develop, implement and maintain to ensure product meets specified product requirements. The specified product requirements for the BEV program for Japan must be met through a QSA or PVP program.
Some highlights of the export verification program for QSAs specified by USDA include:
Ensure cattle purchased or received from outside establishments and used in the program meet the 20-month age threshold.
Evaluate and select suppliers based on their ability to supply product that conforms.
Establish and implement inspection or other activities necessary for ensuring product purchased or received from outside establishments conforms to the age requirements.
Have a documented procedure addressing supplier selection, evaluation and re-evaluation.
Maintain records of the results of supplier evaluations and any necessary actions arising from the evaluation.
Maintain records to provide evidence of conformity to the receiving process and of the effective operation of the receiving process.
Check out the USDA Web site for answers to numerous questions regarding Japan program requirements.
Confusion ahead is likely
There likely will be some confusion regarding the QSA program. For example, Lawrence says, producers who participate in a single packer's QSA must maintain records specific to that program.
“Cattle covered under one packer's QSA program can't be sold to another packer,” he says. “A producer who sells cattle to more than one packer and participates in each packer's QSA program must maintain a separate set of documents for each company.”
Weinheimer notes bull dates “are not sufficient documentation” in the QSA program. Further proof of age is needed to meet the BEV requirements.
He points out such agencies as the Missouri Department of Agriculture have worked with USDA to help develop QSA programs for ranches and auction markets. One such auction market is the Joplin Regional Stockyards in Carthage, MO.
These entities hopefully can link up, he says, to assist each other in getting BEV-approved cattle to QSA feedyards and eventually packers.
Strong premiums likely
With reopening of the Japanese market to U.S. beef, premiums for supplying such cattle could be strong.
“The market is still pretty immature for BEV and QSA cattle, but I've heard $10-$25/head for fed cattle with the verification,” Lawrence says. “Higher numbers have been tossed around, but they're difficult to verify.”
Ultimately, he adds, supply and demand will determine the size of the premium. But, he adds, sellers need to be aggressive in promoting the information their cattle have.
“It's not just a health program, genetics and previous nutrition that add value,” Lawrence says. “If you don't have the necessary system in place to verify your current cattle, start preparing for next year. Japan is the first, but there may be others looking for other traits.”
He says producers should consider their options: do they want to establish their own QSA, sell to a buyer with a QSA program or participate in an independent QSA program.
Meanwhile, Weinheimer is encouraged by QSA programs' early progress. He's hopeful obstacles are not erected to derail it.
“The plan is in place to service the Japanese demands for our beef,” he says. “Hopefully the USDA and others will just let it work like it is.”
Larry Stalcup is a freelance writer based in Amarillo, TX.