Plan B

[rsomer]

ValueChainFX: Points well taken. I believe I recall you said you have been working for 5 years to market your product to Japan. My observations suggest to me that you would be more successful with your enterprise if you were based in the United States or Australia. Any comments?

[cowman]

rsomer: I think you have the right idea. Don't put all your eggs in one basket! Always have options.
One of the real sad things I see is the guy who has never done anything but farm! That's all they know, that's all they care about! When the day comes to quit they have a hard time adjusting!
Life is more than going round and round in a field or following some old cow! It is nice to be able to stay home with the family but the day will come when the kids are gone and then you might just decide you want a change? Believe me strange things happen when you hit the old mid-life crisis! You look at life in a totally different way! You seem to have a good attitude and have positioned yourself with some options. More farmers should be doing that?

[pandiana]

rsomer, regarding your comment that "Canada cannot just change this relationship to have 13-20% or more of our trade with Japan instead of 2-3% even though doing so would probably open opportunities for more beef exports to that country. Because we are in a NAFTA trading relationship with the U.S., that pretty much fills our import market." are you saying that without NAFTA we would not have a heathly trade relationship with the US? It occurs to me that as long as we have something they want at a competetive price trade would continue rather more unfettered by trade rules. I realize tariffs and protectionist policies would still be their but we would have more wiggle room to pursue other avenues.

[ValueChainFX]

rsomer Your question "would I be more successful if I were in the US and marketing in Japan?"

I have to clarify for you, I was marketing Canadian Beef, but the company was a US based company! How much influence this had over the success of the marketing I'm not sure. I can say that the program was very successful and based on the relationships and efforts to make the product exactly what they wanted. There is a segment of the Japanese market that prefers Canadian product, the challenge is getting the volume of the product they want and getting the type of product they want.

I would suggest, that our ability to market to any country will be based on our ability to build relationships based on partnerships, filling the orders with product meeting the customers exact needs and doing that every time we ship.

Would it be easier from the US? Well at the same time as I was marketing from Canada, our US sister plants were marketing to the same customers, I believe we had less challenges than they did. We had less claims, and more customer participation in working with new products and inspecting products being shipped.

I enjoyed working with the Japanese and feel we could build strong stable markets there with the right products.

[rsomer]

Thanks. How do you explain the U.S. having approx. 50% share of Japan's import beef market and Canada having 2.5-3.5% market share. Thats a big difference. Even considering the differences in size of our respective industries we should have at least 5% of the Japanese market. Plus our white fat is what the Japanese are looking for, at least before BSE.

[ValueChainFX]

rsomer the major share of the Canadian exports to Japan leave through Cargill. This company has a small export component to Japan in comparison to the plants in the US (their sister plants). Also most of the beef (prime) from Cargill is shipped south to Fort Morgan breaking plant (a Cargill sister plant). This beef goes down upgraded and how much goes to Japan I'm not sure.

There are others that ship to Japan, but in comparison small quantities. There are some 20 plus US plants that ship to Japan. So my suggestion is, that if the Japanese had access to more Canadian beef they would probably take it. This is an assumption on my part based on past interest in Canadian beef interest from the Japanese buyers.

I would not suggest for one second that there is no politics going on there, but those politics I believe are based on two critical factors. The first is the quantities to fill the orders need to be taken from a product pool with only the right type of beef for the Japanese customers. Second, the company shipping the product has a primary interest in serving their company which is US based so the US company controllers would call the shot as to what goes, what stays and what quantities make up the mix!

[rsomer]

I came across an excellent piece on beef trade. Entitled U.S. - Japan Agreements on Beef Imports, it is an excerpt from a publication, Regional Trade Agreements and U.S. Agriculture/AER-771. I found it to be a very informative read on Japan’s beef industry from its beginnings in 1950-1960 up to today and the influence of the U.S. on getting access to the Japanese market. The link is below:

http://www.ers.usda.gov/publications/aer771/aer771n.pdf