Beef Import Ban Hits Related Industries Hard

The meat and livestock industry is concerned about the possible impact on the Korean economy the confirmation of mad cow disease in the United States may have.

So far, 18 countries have temporarily banned U.S. beef imports. Among them are Korea, Japan, Australia, Thailand, Taiwan, Malaysia, Mexico, Russia, Canada and Brazil.

The U.S. government hasn’t specified how much damage the disease might do to the $175 billion beef industry. Some experts and people in the meat industry are trying hard to calm consumers, saying that only one cow was infected. But the damage is not likely to be small.

Purdue University in the U.S. estimated a $2 billion loss next year due to a decrease in exports and cow prices. Stock prices of McDonald’s, the world’s biggest fast food company, and Tyson Foods, Inc., the world’s largest meat processor, plummeted 5.2 and 7.7 percent respectively on Wednesday. Related industries, such as corn and agricultural machinery, were also hit hard by the disease.

U.S. beef exports that amount to $3.5 billion annually are expected to be hurt. “Considering cases of mad cow disease in Canada, domestic demand will not be affected much in the long term. We are more worried about dwindling exports to Korea, Japan, Mexico and Hong Kong,” said Rick Stott of Agri Beef Co, a U.S. beef producer. Korea, Japan and Mexico imported 89 percent of U.S. beef this year.

Japan’s Ministry of Agriculture, Forestry and Fisheries decided to dispatch its staff to Australia and New Zealand to increase beef imports from those countries in case of a prolonged ban on U.S. beef imports. Japan’s biggest supermarket chain, ItoYokado, said it would continue to sell beef imported from the Midwestern U.S. while the second largest retailer, Aeon, has decided to stop selling U.S. beef.

The European Union is also keeping an eye on the situation but has not taken another step on the U.S. beef situation. The EU has long limited beef imports from the U.S., citing the use of growth hormones.

Canada’s meat industry faced difficulties when 29 countries, including the U.S., banned beef imports from Canada after a case of mad cow disease was confirmed in May. The U.S. eased the ban three months later and plans to lift the ban completely early next year.

Kwan-Hee Hong konihong@donga.com