Praying for poultry?
Jan 11, 2010
By Steve Cornett
Let’s get one thing straight first. Taiwan is an important customer for beef. However, their politicians’ much ballyhooed announcement last week that they would renege on their promise to accept bone-in, older beef won’t have much impact on sales to the island.
On the other hand, warns Gregg Doud, chief economist and agitator at National Cattlemen’s Beef Association, Russia’s decision to stop taking U.S. poultry parts could result in an overwhelming backlog of protein.
Both were in the news last week, and nobody cowy could find good news in either story.
This trade thing is tricky, isn’t it?
You get a market built up in a country, adjust your production, and here comes some new rule—intentionally protectionist or not—and you’re worse off for a while than you were before you built the new market.
We saw it back in the 70s with grain. We’ve certainly seen it with beef in the wake of that BSE cow. But chickens?
As you may have noticed, chicken production in the U.S. has been increasing for decades. One reason is that poultry perpetrators learned to sell the dark meat to poor folks abroad, thus allowing them to sell white meat cheaper in the U.S.
The biggest market for that dark meat has been Russia. In fact, the U. S. has been shipping something like 600,000 metric tons of mostly chicken legs to Russia annually. That, assuming my math is correct, would equal 4,624 fed cattle a day—almost 1.7 million a year.
You cannot just go suddenly having that many extra cattle and not expect some market problems. Doud points out that the going price for a chicken leg is 30 cents a pound. What you don’t want, assuming you have a fed steer or component part thereof for sale, is your customers—already bargain hunting in these hard times—to have the option of a bunch of extra metric tons—metric or otherwise—of dry-but-edible chicken parts hogging the meat cooler.
So even the chicken haters among us, should wish USDA good luck in their efforts to get the Russians to change their minds. Their complaint strikes those of a scientific bent as a bit chicken to start with. U.S. poultry producers—you’ve heard they have some food safety challenges?—like to wash their product in chlorine. That’s the same stuff we pour in swimming pools so our children can drink it.
But the Russians, noting that too much cholrine can kill you, said that as of Jan. 1, they will no longer accept chlorine-rinsed poultry. It sounds like they might make and exception for product already enroute and they’ve agreed to meetings later this month to discuss the possibility of changing their minds.
Doud says the outcome of those talks will be more important to his membership than similar talks planned with the Taiwanese over their decision. They are still accepting boneless cuts from cattle under 30 months of age, and they took about 30,000 metric tons of that last year, making them the 8th largest customer for U.S. beef.
So Doud and others are mad at the Taiwan folks over reneging on the trade agreement. Still, their move reflects on their domestic politics than on any fear of U.S. beef.
So this is no time for us to go all protectionist. Beef has had a few tough years in the export market since the BSE problem, but things are getting better almost monthly. We’ve learned to pretty well fill the demand for cattle of documented age. Our dollar is getting cheaper. You get past the dead chicken problem, and the outlook for exports increasing is pretty darned good, actually.
With a weak domestic economy, exports are our best chance for getting a much-needed runup in cattle prices. So, just this once, let’s all pray for poultry.
Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at email@example.com.
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