Japan moves closer to removal of 30-month rule

At the very least they expect to recover to equal footing status what was lost to them when President Donald Trump pulled out of the Trans Pacific Partnership deal, a very substantial tariff reduction schedule for beef.

But while those proceedings continue there is another issue under separate consideration which will bestow further benefit to the US if a decision falls in their favour.

It is the 30-month cattle age restriction rule imposed on the sourcing of beef in the US for export to Japan.

In 2003 after discovery of bovine spongiform encephalopathy (BSE) in the US, Japan placed an import ban on US beef.

Japan reopened its market to US beef in 2006 with a 21-month cattle age limit but extended the limit to 30 months in 2013.

Further consideration on the age-limit matter falls to Japan's Ministry of Health, Labour and Welfare (MHLW) which recently closed a public comment period as part of its review.

Those comments will now be considered and while there is no timetable for a resolution one way or another, there is very strong expectation especially from the US Meat Export Federation (USMEF) that the 30-month restriction will be removed and soon.

USMEF estimates that removal of the age restriction will increase muscle-cut beef exports by 6-13 per cent and variety meats (offal) by 25pc. All up, they estimate this single factor has the capacity to lift US beef exports overall by 7-10pc worth US$150-200 million a year.

That it is not a greater amount stems from the fact that 80pc of current US beef production comes from fed cattle younger than 30 months of age. Nevertheless, cattle over 30 months will yield additional quantities of short plate, chuck eye rolls, short ribs, middle meats, clods and briskets.

But the biggest impact will be in offals. It is Japan's liking for offal that will see greater volumes of tongue, mountain chain tripe, outside skirt and hanging tenders harvested from cattle aged over 30 months.

Commenting on the market growth this issue represents, USMEF president and CEO Dan Halstrom was careful to link its full potential to what USMEF sees as much-needed tariff relief.

Highlighting the tariff gap between the US and competitor CPTPP countries he said that to fully capitalise on the opportunity, the over-30-month beef cuts and offals need to be on a level playing field in Japan as with all US red meat products.

IN the wake of disarray that now seems to surround US/China trade talks, the US appears to have found new urgency in getting a win of some sort achieved in their trade negotiations with Japan.

According to Japanese media reports, US Trade Representative Robert Lighthizer was on the phone to Japan's Economic Revitalisation Minister, Toshimitsu Motegi, immediately after the US trade team met with Chinese counterparts in Washington last Thursday to confirm a pathway for striking an early deal.

Suggestion from analysts is that a positive result from the Japan negotiations would provide some leverage for the US in their trade-reform dealings with China and Europe. That urgency was reinforced on Saturday when US Agriculture Secretary Sonny Perdue met with his Japanese counterpart Takamori Yoshikawa on the sidelines of a G20 meeting of farm ministers in the Japanese city of Niigata.

The Japan Times reported Perdue urged for a quick agreement with Japan to remove tariffs on American farm products as part of efforts to reach a bilateral trade deal.

President Trump has already made known his desire for a good-news announcement by the time he visits Japan later this month as the first foreign leader to meet the new Japanese emperor. But convincing Prime Minister Shinzo Abe to make such a concession within this time frame is a big ask.

Japan's upper house elections are due in July and Abe would not want to risk support for his ruling coalition ahead of those elections by upsetting the domestic farm lobby who are known to be deeply concerned at the prospect of Japan yielding to US demands.

Balanced against this, however, is the Trump deadline of May 18 on whether to impose import tariffs on automobiles and auto parts from around the world (including Japan) on grounds of US national security.

Japan's trade-off against this present and future threat and the aluminium and steel tariffs already introduced by Trump is essentially the agriculture card that it holds and the knowledge that its negotiating value is increasing as the US loses farm commodity trade to CPTPP competitor countries.

Regrettably for Australia the US will achieve tariff relief for its beef exports sooner or later. The best to hope for is that Japan gives no greater ground than CPTPP equivalence.

SINCE April last year cows have dominated the kill. Processors and market watchers thought the October rain last year may have brought the run to an end and so it looked with the November female proportion dropping below 50pc for the first time.

But it was only momentary and the subsequent return wave saw the percentage spike to a massive 58.1 in March. April's weather change provided some hope for producers and another momentary pause in female numbers and this put some sheds under pressure to maintain shifts.

But May will be back up there with another wave coming forward now as frost starts to bite and water and feed shortages continue. The extra numbers have provided a degree of breathing space for central and southern sheds but the pipeline is by no means long.

Grid rates for southern and central Queensland remain unchanged at 535c for 4-tooth ox and 440c for heavy cow.