Despite Lure of Japan Trade, Many U.S. Beef Plants Opt Out

OMAHA, Neb. – When Japan banned U.S. beef in 2003 because of mad cow fears, the industry braced for a big financial hit, with job losses spilling into Midwest feedlots, supply companies and retail businesses.

So when Japan agreed to lift the ban — contingent on Japanese checks of U.S. beef plants — many assumed that the inspectors would be welcomed everywhere with open arms.

But while 35 American beef processing plants are submitting to the inspections, thousands of other plants have opted out, deciding not to bother with exporting.

"There are a lot of guys who don't want to go through the hassle of these inspections," said Deven Scott, executive vice president of the North American Meat Processors Association.

Japanese inspectors began visiting U.S. beef processing plants on June 24 after an agreement was brokered to restore the once-lucrative beef trade with Japan that used to account for about $1.4 billion a year and 10 percent of U.S. beef sales.

The one-month audit will tour 35 meatpacking plants to ensure the facilities comply with Japanese import regulations. Inspectors will also review procedures at ranches, feedlots and mills. The Japanese inspectors will visit seven beef processing plants in Nebraska starting on Friday with the Tyson Fresh Meats plant in Dakota City.

While many of the small and mid-sized processing plants Scott represents would like a taste of the export market, most smaller plants lack the resources needed to comply with international trade regulations and don't produce enough beef to be competitive with large meat processors like Tyson Foods Inc.

"You certainly can't ship 5,000 pounds of steak to Japan for the same price Tyson can ship 5 million pounds of steak to Japan," Scott said.

The Japanese inspections are scheduled to continue through July 21, and U.S. Department of Agriculture spokesman Ed Loyd said U.S. officials hope Japan will lift its ban within weeks of the completion of inspections.

The ban was first lifted at the end of last year. But in January, Japan again halted imports of American beef after one shipment was found to contain prohibited parts of cows believed at risk of the disease.

In June, Japan agreed to lift its ban again, but only after thorough inspections of U.S. meat-processing facilities.

The lifting of the ban may have hit another stumbling block on Friday, after Japanese agriculture officials said they found a box of U.S. roast beef in a shipment of turkey and ham from the United States. It's not yet known what effect the incident will have on Japan's stance toward U.S. beef, but the Kyodo news agency quoted a high-ranking agriculture ministry official as saying that it underscored continuing sloppiness among U.S. beef processors operators.

Opening up additional export markets should help the entire beef industry regardless of how many plants actually export meat, because beef demand and prices will likely increase, said Janet Riley, spokeswoman for the American Meat Institute, which represents about 1,100 companies.

Steve Sands, chief executive of Premium Protein, said he's expecting a thorough review when the Japanese visit his company's plant at Hastings, Neb., but the higher prices export markets offer for certain cuts of meat make the process worth it.

"That economic incentive is worth the extra effort and extra record keeping," he said.

Some products such as beef tongue are valued highly in Japan, but hardly sell in the United States, Sands said. But other products popular in America, such as a 16-ounce T-bone steak, don't sell well in Asia, Sands said, because Japanese consumers eat smaller portions.

Sands said his company expects to sell 15 to 20 percent of its products in foreign markets once the trade is restored with Japan and other countries.

All beef shipped to Japan will have to come from cattle less than 20 months old and no brain or spinal material can be included because that tissue is known to carry mad cow disease.

Loyd said the Japanese inspectors are checking to make sure processing plants can prove each cow's age and document its path to slaughter and that the physical plant is acceptable.

Cargill Meat Solutions, the country's No. 2 beef processor, said it has no objection to Japanese inspectors examining its plants, noting that its plants are continuously inspected by the USDA and are often audited by customers.

Beef from cattle up to 30 months of age is accepted in the United States and most other countries; Japan wants the 20-month cutoff because infection levels from mad cow disease are believed to rise with age.

Mad cow disease is the common name for bovine spongiform encephalopathy, or BSE, a degenerative nerve disease in cattle. In people, eating contaminated meat products is linked to a rare but fatal disease called variant Creutzfeldt Jakob disease.