US Beef Quota Rankles Australia, New Zealand Ranchers

AUSTRALIAN and New Zealand ranchers are howling over protectionist restrictions on their exports of beef to the United States.The restrictions, which are expected to be in the form of voluntary restraints, could cost Australian ranchers $100 million (Australian; US$78 million). Unless the ranchers can find new markets for their beef, they will lose about one month's worth of exports. "[Slaughterhouses] will be forced to close down and put off workers and some meat will be placed in bonded storage, which will add to the cost," says Mike Hayward, marketing manager for the Australian Meat and Livestock Corporation (AMLC). New Zealand officials refused to speculate on the effect on its 46,000 farmers and 22,000 meat workers. "Meat is our biggest export earner and trade measures can have a dramatic and devastating impact on farm income," says Cheryl Craig, trade policy manager at the New Zealand Meat Producers Board in Wellington. The New Zealand beef industry is still recovering from a drought in 1988-89 that caused ranchers to reduce their herds. Beef exports slumped last year while the herds were built back up. With its herd size larger, New Zealand this year is exporting a higher quantity of beef. "[New Zealand's] surge led to this position," says Australia's Mr. Hayward. The New Zealanders blame Australian exports, also well above normal levels. In expectation of the restrictions, live cattle prices in the Australian state of Queensland have been falling. Ranchers received an average of 193 cents per kilo for their cows in July. The price on Sept. 10 was 181 cents per kilo. This year the market has demanded more Australian and New Zealand beef to make hamburger. Beef from these two countries is low in fat because the cattle are range-fed. Most cattle in the US are fattened on grain in confined lots. Australia exports A$1 billion in beef to the US; New Zealand exports over $800 million (New Zealand; US$462 million). The US is the largest market for both countries. Until recently the cattle industry was one of the few bright spots in the Aussie farm sector. But a drought this year has forced ranchers to slaughter their beasts at a faster rate. In addition, livestock producers miscalculated how much beef they could sell to Japan, which lifted its bans on beef but imposed a 70 percent tariff. The high tariff has cut back on sales. Drought and disappointment with Japanese sales forced farmers to increase exports to the US. In mid-August, the AMLC estimated it would ship an extra 40,000 metric tons (44,000 short, or US, tons) to the US, and New Zealand raised its estimate by 8,000 metric tons. In the beginning of the year Australia had estimated it would supply 325,000 tons to the US; New Zealand estimated 205,000 tons. The rest of US supplies come from Central American producers, which have mostly stayed within their quotas. The US government advised Australia and New Zealand on Sept. 10 that their meat imports would exceed limits set for 1991 by the US Meat Import Act. Under the Act, beef imports are limited this year to 598,000 metric tons. The beef controversy adds to trade frictions between the US and Australia and New Zealand. Australian wheat farmers have been hammered this year by US subsidization of its exports - a response to European export subsidies. (On Sept. 10, Australia intensified its attack on EC subsidies by releasing an information booklet describing how much the subsidies cost consumers. It will be distributed in Europe.) Beef quotas were last imposed in 1988. The timing this year is sensitive, however, since farm protectionism is being negotiated in the Uruguay Round of the General Agreement on Tariffs and Trade. "The US Meat Import Act is contrary to the principles that the US espouses in world forums," says Dick Austen, chairman of the AMLC. Philip Burdon, New Zealand's Minister for Trade Negotiations, says the Meat Act is one of the key barriers to the country's trade with the US. "We are seeking to have it removed in the Uruguay Round negotiations where it forms part of the United States negotiating offer," he says.