Japan beef imports not seen as immediate boost to Tyson
Tyson Foods Inc., the world’s largest meat company, will not see a significant benefit until sometime next year from Japan’s decision to ease a ban on U.S. beef imports, the company and analysts said Monday.Japan accounted for half of all U.S. beef exports before the 2003 ban and Monday’s reopening is a major opportunity for U.S. producers including Tyson, whose beef division accounts for about 45 percent of sales but has seen sales and profitability slip amid rising cattle prices.Tyson said sales to Japan would be limited because of the country’s restriction that it will only import meat from cows younger than 21 months because no cases of mad cow disease have ever been found in cows that age, and because of new procedures for verifying cattle ages.Still, Tyson said it hoped Japan’s move would trigger an end to similar bans in South Korea, Taiwan and Hong Kong.”However, it will take time to return to meaningful export levels in Asia. In fact, even if these other markets open soon with less restrictive export requirements, we may not see significant export business to Asia until the second half of fiscal 2006,” Tyson said in a statement.Japan and dozens of other countries banned U.S. beef after mad cow disease was confirmed in Washington state in a cow that had been imported from Canada. Japan agreed Monday to ease the ban.”It is not realistic to expect that we will go from zero to the same we were exporting pre-ban overnight,” said David Anderson, extension economist at the Texas Cooperative Extension Service at Texas A&M University in College Station, Texas.The problem will be trying to regain market share that has gone to other countries or products.”U.S. beef producers are going to be trying to regain market share against Australian beef and also against U.S. pork. But the potential there is huge,” Anderson said. “The speed of how fast that happens is really up in the air.”Farha Aslam, vice president and head of food and agribusiness equity research at investment bank Stephens Inc., anticipates “it is going to be two to even possibly three years before Japanese import volumes return to pre-ban levels,” Aslam said.”It is going to take time for U.S. manufacturers to recapture market share,” she added.Tyson’s beef division will have to struggle with high cattle prices in the short term, she said. But if cattle prices ease next year as anticipated and Japan export volumes start to grow, Tyson’s beef decision should see improved profitability in the second half of its fiscal 2006 year, which ends next October.Clinton S. Mayer, analyst at Burnham Securities Inc, said he did not expect an immediate impact on Tyson’s share price from the Japan announcement.”A year ago this would have seemed a big decision. But other countries have established a strong foothold in Japan and there’s a certain resistance among Japanese consumers right now to buying American beef,” Mayer said.Shares of Tyson rose 16 cents, or 1 percent, to $16.65 in afternoon trading on the New York Stock Exchange.