COMMODITIES: Mad Cows Derange 1996 Beef Prices

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Nov 18 1996 (IPS) - The world beef market suffered heavily in 1996 as “mad cow disease” and plunging prices left the sector with showing no signs of recovery.

Half-way through the financial year, prices in the United States had fallen 20 percent in relation to early 1995, and 40 percent compared with the same period of 1994.

Market forecasts have concentrated on the effects this will have on prices in the seasonal livestock sales in the United States and the after-effects of the “mad cow” phenomenon.

The only nations currently stimulating the market are Japan, South Korea and the Russian Federation, all of whom are expected to make considerable increases in their imports this year.

The second annual report of the International Bovine Meat Agreement stated, with no precise figures, that consumption fell in Europe following the spread of Bovine Spongiform Encephalopathy (BSE).

On March 20 the British Government stated there could be some link between several new cases of the Creutzfeldt-Jakob syndrome and the beef consumed in the late 1980’s.

This official information fed fears that BSE could be passed on to human beings via the food chain.

The international meat market also had to suffer the appearance of the United States as a net exporter, in terms of volume of beef, for the first time since 1945.

A report issued by the World Trade Organisation (WTO) Monday indicated that by the close of 1996, the United States will have exported 962,000 tons compared with 943,000 tons of imports.

This change in the role of US cattle raisers has resulted from the increased competivity of its meat on the world market due to lower domestic prices and favourable changes in the exchange rates.

The United States, which for many years boasted of being the leading world beef importer, will hand its title over to Japan this year.

In 1995, this nation had imported 940,000 tons, but this year the figure is expected to reach nearer 1.03 million tons, up 10 percent.

Japan also leads the pork import ranking, buying a third of the world supply.

Uruguay also appeared in the market in its new classification as a foot and mouth-free nation, sending its first consignments of chilled and frozen meat off to the United States.

Stimulated by good long-term perspectives, the Uruguayan meat industry is currently in a period of expansion, read the report.

Argentina, another of the leading South American exporters, is following in Uruguay’s footsteps on the path to being declared foot and mouth-free, which will allow it to improve is exports to the United States and Asia.

But the Argentine industry is also experiencing difficulties based on adverse climatic conditions, with falling domestic consumption and the knock-on effects of the mad cow crisis.

The WTO report stated that Argentina had been struck by the European Union meat consumers’ loss of confidence, as this region has recently been its main international beef market.

Both the volume and the price of Argentine meat exports have fallen by 17 percent, and the South American nation will export 425,000 tons this year, compared with 513,000 in 1995.

The Brazilian livestock raisers have benefitted this year from more stable macroeconomic conditions and steady growth of the domestic market.

The world market was also shaken this year by two beef-related complaints presented to the World Trade Organisation problem resolution organism.

The United States called for the formation of a special panel to evaluate a European Union disposition which banned beef imports from livestock treated with hormones.

This panel was created last May, and Canada presented a similar complaint against the EU in June, and the WTO ordered another panel to look into this complaint in October.