Meat + Poultry - October 2004 - 12

Beef trade in the "new" E.U.
On May 1, 2004, 10 new member states joined the European Union,
increasing membership from 15 to 25 countries. With the 10 acceding member states - Cyprus, the Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia - the new
E.U.-25 encompasses 455 million people and land area of over 1.5
million square miles.
The unprecedented scope of the enlargement and the recent reform of the Common Agricultural Policy create unusual circumstances for forecasting future trends in production, trade and consumption.
Many European farmers are still struggling to understand the implications of the new CAP reform, particularly for beef.
Cattle slaughter numbers and beef production in the E.U.-15 are

projected to increase slightly in 2004, as farmers continue to receive
payments under the old system. With the introduction of a new payment program in 2005, beef production is expected to decrease. Pork
production will remain largely unaffected by the new CAP measures.
Trade dynamics in the new E.U.-25 are still evolving. With the removal of trade barriers on May 1, buyers from the E.U.-15 rushed to
buy less expensive meat from the N.M.S. This caused a general increase in meat prices.
Since 2002, the E.U.-15 has been a net importer of beef. This
trend is expected to continue for the E.U.-25, as beef production stabilizes under the new CAP system, and as the growing volume of intra-E.U. trade overshadows the significance of external trade.

Korean market evolves in wake of beef ban
South Korea is currently maintaining
bans on both U.S. and Canadian
beef. It is unclear when the Korean
government will lift either of the
B.S.E.-related bans. South Korea dispatched a technical team
to the U.S. to review and validate the
findings of the International Review Commission in May 2004. Results of discussions between the U.S. and Japan on lifting Japan's
ban on U.S. beef will have a strong influence on
when the South Korean ban is lifted.
South Korean beef demand plummeted after
U.S. beef was banned in response to the discovery of B.S.E. in a Washington state cow on
Dec. 23, 2003. Although beef demand also
dropped after South Korea banned European beef in 2001, the fact that Korea did not import beef from Europe allowed consumption to return
to normal five months after the ban.
In contrast, the U.S. supplied 68 percent of all beef exported to
South Korea prior to the ban. Accordingly, the effects of the ban on
U.S. beef are expected to take longer to overcome although con-

sumption is anticipated to pick up slightly in 2005. Higher production
and lower retail prices of Korean beef cattle in 2004 will also help
boost the consumption in 2005.
Lucrative Korean live cattle prices prior to the ban on
U.S. beef continued into January 2004 as producers
and processors anticipated higher demand for beef
caused by the import ban. In turn, farmers continued
to expand herds through the first half of 2004. However, as overall beef consumption dropped and the
economy failed to pick up, local cattle prices have
begun to decline in 2004.
South Korean government policies are focusing
less on stimulating local production and, instead,
emphasize enhancements to the food safety system
covering beef. The new focus includes development of
a traceability program and environmentally friendly livestock policies.
Despite significant reduction in cattle prices and a sluggish economy, local beef prices remain 3.5 times higher than imported beef. Local products are targeted to the high-income consumer
market. However, the majority of South Korean beef consumers who
focused formerly on reasonably priced, high-quality imported beef
have shifted to other proteins, such as pork and fish.

Hong Kong alters poultry paw certification policy
The Hong Kong government has requested the U.S. health certification for poultry paws to be aligned with Hong Kong's current certification requirements for poultry meat. In Hong Kong poultry feet/paws
have the same health certification as poultry meat. The new requirement will take effect April 30, 2005, and U.S. processors may need to
adjust their production facilities to make ante mortem and postmortem inspection possible, if they want to continue exporting chicken
feet to Hong Kong.
Hong Kong's imports of U.S. chicken products declined by more
than 62 percent in the first six months of the year compared to the
corresponding period this past year. The decline was largely due to
12

MEAT&POULTRY

Hong Kong's ban on U.S. poultry meats between Jan. 11 and April 30
following the avian influenza cases in the U.S.
The U.S. exported $45 million worth of chicken products (including
chicken feet) to Hong Kong during February 2003 to April 2003 and
the export value declined to $10 million during this same period in
2004. Therefore, Hong Kong's ban on U.S. raw chicken products represents a loss of approximately $35 million, in terms of export value.
Given that about 82 percent of U.S. chicken products exported to
Hong Kong are re-exported to China, it is reasonable to foresee that
U.S. poultry exports to Hong Kong will not return to the normal level
as long as China's ban on U.S. poultry products continues.

www.MEATPOULTRY.com

OCTOBER 2004

http://www.MEATPOULTRY.com

Meat + Poultry - October 2004

Table of Contents for the Digital Edition of Meat + Poultry - October 2004