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October 7,2003
Idaho cattle may open export market for Northwest
A shipment of 800 steers making its way to South Korea is the first of its size in nearly 20 years, and the delivery could lead to more
By WENDY OWEN as reported for the Oregonian
An Idaho rancher who recently delivered nearly 800 cattle to a ship in The Dalles bound for South Korea may have helped open a national export market for ranchers in the Pacific Northwest.
If the ship docks in the South Korean cities of Inchon and Busanin with healthy steers, the cattle fatten up to provide nicely marbled meat, and the export costs prove to be reasonable, the success could launch a $40 million annual market of exports from Oregon to South Korea.
Those are a lot of ifs. Although many people are excited about the prospect of new overseas business, there's a reason such new markets are rare for the United States: the expense.
By the time the steers, which were shipped Sept. 28, reach South Korea about Oct. 16, they'll be worth $1.1 million, based on their U.S. wholesale meat value and the costs to get them there, said Missy Thompson, vice president of Portland-based Transversal International, which shipped the cattle.
"It costs a ton more," said Doug Mikelson, a rancher in Wilder, Idaho. The 1,000-pound animals were worth a total of about $700,000 when they left his feedlot.
Mikelson expects to lose money on the venture, but he said he did it to open a market. He hopes profits will come later as the process grows more efficient.
"Right now in the U.S., we have record cattle prices," Mikelson said. "But all things change, and the more markets, the better. We could go to other countries in the Pacific Rim."
Nothing on the scale of 800 beef cattle has been shipped from Oregon since the 1980s, according to agriculture officials. Mikelson's was the first shipment of its kind to leave The Dalles, a newly designated federal port of embarkation for livestock.
Most of the livestock exported from Oregon are racehorses, dairy cows and breeding cattle, and they're generally shipped in numbers small enough to be flown via 747 cargo jets. Since October 2000, Oregon has exported about 360 animals, mostly horses to South Korea, said Don Herriott, a Salem-based veterinarian for the U.S. Department of Agriculture.
Nationwide, exports of beef cattle are rare. Most of the 244,000 cattle shipped out of the United States in 2002 were dairy and breeding livestock bound for Mexico and Canada. The United States imported 2.5 million head of cattle the same year, according to the U.S. Department of Commerce.
South Korea gets most of its live beef from Australia. The so-called feeder cattle are fattened in Korean feedlots and slaughtered, giving the country more control over the quality of its meat and keeping its processing plants running.
Alternative to Australia An Australian shipment about six months ago included a case of blue tongue, a disease spread by biting gnats that causes an animal's mouth, nose and tongue to swell. As a result, South Korea is trying U.S. cattle, said John Kratochvil, international trade manager with the Oregon Department of Agriculture.
South Korea has imported only 1,400 U.S. cattle this year, not including the 800 shipped from The Dalles. The Asian country, however, is the third-largest importer of U.S. processed beef, purchasing $257 million worth in 2003, according to the National Cattlemen's Beef Association.
Dale Leuck, a specialist with the animal products branch of the U.S. Department of Commerce, was surprised to hear about Oregon's venture into exporting beef cattle to South Korea.
"Over the years, it has almost certainly shown it's not economically viable on a large scale to ship feeder cattle," he said.
But Leuck said it is possible. "It's the risk-takers who open up these markets," he said.
Portland's Pony World Farm, which has shipped racing horses to South Korea, was behind the idea. It took the company and the cattle buyer, C & A International, two years to put the plan together, working through regulatory hurdles and gaining approval for a U.S. port, among other issues.
Pony World Farm selected The Dalles because it was closer to the Idaho cattle.
Some labor advocates said the company chose The Dalles because it had a nonunion dock, which lowered shipping costs. Members of the International Longshoremen and Warehouse Union picketed at the dock during the loading of the steers.
Portland no longer has a federally approved livestock loading dock, the state's Kratochvil said.
Pony World Farm President S.B. Kim could not be reached for comment about the steer export business. A news release stated, "With the help and support of state and federal agencies, it could be a profitable business for Pacific Northwest ranchers."
Paperwork and regulations Back in Idaho, rancher Mikelson sounded tired after delivering the steers, but he said transporting and loading the cattle were the easy parts. Meeting the U.S. Department of Agriculture regulations "wore me down."
On his desk lay a bill from the USDA for nearly $10,000 for veterinary inspections of the animals. He had to hire two people and find electric typewriters to complete 70 pages of carbon-copy health certificates for the steers. Australia has a six-page computerized form, Mikelson said.
He estimated that meeting all of the regulations cost him about $30,000.
"Our current regulations in the U.S. are why we aren't shipping more than we are," Mikelson said. "We're competing with the Australians. They work more closely with the farmers."
Mikelson had to get help from Idaho legislators to work through some of the regulations.
"There were a couple of problems with USDA policies," said Mark Warbis, spokesman for U.S. Rep. Butch Otter, R-Idaho. "They haven't been updated since the 1970s."
The South Korean buyer and Mikelson found several impediments to exporting the cattle, Warbis said. "Those needed to be removed to make them competitive with Australia," he said.
For example, Warbis said, veterinarians were required to test the steers for venereal diseases. Steers are castrated as calves.
"The USDA has been working with us very well," Warbis said. "Having this first shipment out, it's going to make it easier for others. Mr. Mikelson needs to be commended for this."
In The Dalles, Auction Sales Co. scrubbed and disinfected its concrete stalls and erected a temporary roof over the animals. USDA veterinarians inspected each steer for a variety of diseases. Then the quarantined steers shipped out aboard a 280-foot-long "Corral Liner" ship.
Benefits versus profits If the shipment to South Korea is successful, The Dalles could become a permanent shipping site. The economic benefits remain uncertain because, at most, the Koreans can take 850 cattle a month. Their holding space is limited, Kratochvil said.
If the South Korea steer export market proves profitable, it will help all ranchers, but especially those in the Northwest, Kratochvil said.
"Whenever you have a number of people bidding in the marketplace, it shores up the price," he said. "Anytime you have a reduction in supply, the price goes up."
As for Mikelson, he said he had no regrets for all of the time and money he put into the shipment.
"Any export is an economic boost," he said. "It's new money coming into this country."
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