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Beef Exports Rise To Russia

published: August 27th 2008
source: The Morning News

SPRINGDALE, ARKANSAS-- Russians have rediscovered a taste for U.S. beef in recent months after going without it for almost four years.

Russia ordered 24.7 million pounds of U.S. beef in the first half of the year, with another 15 million pounds in outstanding orders, according to the U.S. Meat Export Federation.

The value of those 2008 orders totaled $25 million, outpacing the values achieved prior to the 2003 beef ban related to bovine spongiform encephalopathy, commonly known as mad cow disease. The uptick in demand is a welcome sight for U.S. cattlemen and beef processors.

Closed to U.S. beef from late 2003 through most of 2007, Russia has quickly become the third-largest destination for U.S. beef variety meats and the seventh-largest market for overall exports of U.S. beef, the federation said.

Springdale-based Tyson Foods Inc. said it did virtually no beef business in Russia in 2007, however export sales there in fiscal 2008 have been good. The company declined to provide exact numbers.

"Most of the volume we're currently supplying is in the form of beef round cuts as well as beef shoulder cuts and trimmings, which are used by Russian manufacturers to produce processed meats," Tyson spokesman, Gary Mickelson, noted in an e-mail.

The Russian market is ripe for enormous growth opportunities for the U.S. beef industry as rising consumer demand and declining domestic production has set up the perfect scenario for exports, said Joe Schuele, spokesman for the U.S. Meat Export Federation.

High domestic input costs of grain and fuel have brought beef production down in Europe, and competing South America, which has sent beef prices higher, Schuele said. The weakness in the U.S. dollar across Europe and the Brazilian real makes U.S. beef far less expensive for the Russians than domestic cuts or South American imports, he said.

Industry watchers say Russia's food industry channels -- restaurant and retail -- are undergoing rapid growth on the heels of the country's new found oil wealth.

Russia's burgeoning restaurant segment has increased demand for high-quality beef cuts that were once widely purchased by South Korea and Japan, before trade disruptions stalled export sales, said Travis Justice, spokesman for the Arkansas Beef Council.

Justice said broader exports to Russia bode well for the cattle industry, which has seen tough challenges with a shrinking herd, export disruptions and soaring input costs for grain and fertilizer.

While food processors like Tyson Foods welcome the higher cut beef business from Russia, liver and other processed meats like sausages remain the nation's core market.

Russia is a critical market for beef liver, a product underutilized in the United States. Russia and Egypt are the two main export markets for beef liver and in recent months have bid up prices -- triple the value of last year -- adding an additional $7 per head for cattle producers, Schuele said.

The industry watchers agree that political differences between the U.S. and Russia are always a threat to stifle the flow of beef trade. But processors and cattlemen plan to take full advantage while the window is wide open, Justice said.