Irish beef will soon be on sale in America once more.

On Monday, Agriculture Minister Simon Coveney announced that after two years of negotiations, Ireland had received final approval from the United States Department of Agriculture (USDA) for the export of Irish beef across the Atlantic.

Minister Coveney hailed the opening of the market, which he said could be worth as much as €100m in 2015. The US banned the importation of Irish beef in the late 1990s following the BSE outbreak.

“I am delighted with this confirmation that the US market is now open to Irish beef. This is the culmination of two years of intensive work between my Department and our US counterparts to prove our credentials as a supplier of highest-quality premium beef,” the Minister said.

While the quantities of beef we will be sending will be small (Bord Bia estimated in 2014 that it might be not much more than 2,000t), Irish processors are clearly targeting the high-end retail and restaurant market. Officials on both sides of the Atlantic believe that Minister Coveney’s €100m valuation of the market is excessively high, but certainly the opening of a new market is something to be welcomed.

Bord Bia confirmed to the Irish Farmers Journal that it has been in discussions with chefs, retailers and beef importers for almost two years.

Marketing Irish beef as grass-fed (or “green beef” as it is known in America) has helped develop the certification process, according to Bord Bia’s US representative Karen Coyle.

Coyle said significant amounts of “trade and desk research” was carried out prior to seeking USDA approval and it was found that grass-fed beef was the best option.

Coyle also said that Bord Bia is using a strategy similar to that of Kerrygold for growing the Irish beef market in the US.

“What Kerrygold has done is very laudable. It has been a very slow and steady build-up approach over the past 15 years or so … it is now the number one imported butter. I think our beef can do what Kerrygold has done,” Coyle said.

Who will be sending beef and where will it go?

The Irish Farmers Journal understands that most of the major processors in Ireland have been carrying out ground work in trying to obtain access to the US market. However, two processors are out in front with regards to being the first companies to get Irish beef into America.

Those are ABP and the Foyle Food Group. ABP Clones and Foyle were the two processing units inspected by US veterinary officials last July and, therefore, have “first refusal” on entering the market.

When talks on reopening the US beef market commenced some two years ago, the ideal scenario would have been the placing of prime cuts into high-end retail outlets. However, with significant shortages of American beef for the domestic market, Irish beef, as a high-quality and cheaper alternative, is likely to thrive very well in the manufacturing trade.

The Irish Farmers Journal understands that ABP is close to signing a deal with a supplier in the US.

One of the companies believed to be in the running is Whole Foods, a high-end multinational retailing giant that specialises in organic and natural foods.

ABP was only able to confirm that it is in talks with a US supplier and it hoped to make comment soon.

Whole Foods has 388 stores in the US, Canada and Britain, employs more than 84,000 people and has annual sales of $12.9bn.

In an interview with the Irish Farmers Journal at its Texas headquarters, Becky Faudree, global meat coordinator of purchasing with Whole Foods, said the company favours the Irish style of production and wants access to grass-fed beef. Faudree said that Whole Foods is “very interested in sourcing beef from Ireland” and that the retailer is “already in contact with [an] Irish processor”.

One of the requirements is having animals that have never had antibiotics. The retailer is not opposed to animals who have been sick, but any animal which has been “treated for disease” will “need to be diverted to another customer”.

Whole Foods will also accept “grass-fed beef up to the age of 28 months”.

As a company policy, Whole Foods prefers to deal directly with farmers and likes suppliers to be involved in the setting of price. It also operates a whole carcase “utilisation programme” where it has partnerships to sell the surplus cuts it does not use into other areas of the market.

ABP has been preparing for this deal. It placed Tara Maguire, a former marketing executive for Kerrygold in the US, as head of its North America development almost two years ago in anticipation of a market opening.

In a more practical sense, the processor has also been active in buying Angus calves over the past year. Angus beef is the most popular beef for consumption in the US.

Access to the manufacturing trade is likely to be the first port of call for processors, with quality Irish beef being available at cheaper prices compared to that of other global traders like Australia.

The next steps

Minister Coveney and Bord Bia will lead a trade visit to the east coast of America in the first or second week of February. This mission will act as the official launch of Irish beef in America.

EU Agriculture Commissioner Phil Hogan will attend the USDA outlook forum in Arlignton, Virginia, next month. Hogan will be joined by US agriculture secretary Tom Vilsack. Vilsack visited Ireland in June last year, where he confirmed that Ireland was close to getting access to the US beef market.

If nothing else, it is symbolic that Commissioner Hogan has been invited to speak at the forum. Predecessors of Hogan had never been considered for the role, and the link between Ireland and the US on beef has been seen as a natural opportunity for the new commissioner to talk.

ABP and Foyle will also have to face one final veterinary inspection from the US. Once the all-clear is given, the first consignments of beef should soon follow. Bord Bia CEO Aidan Cotter said he expects beef to be sent “within weeks”.

Cattle prices in the US have never been higher. Severe drought in the traditional cattle-breeding states has led to cattle numbers dropping to levels last seen in the 1930s.

The US cattle population has gone from 106m in 1996 head to 88m head at the end of 2014. However, consumption rates have also dropped.

The cattle-rearing states of Nebraska, California, Texas and Oklahoma have been hit with drought. More than 50% of the total value of US beef sales come from these five states, but these same states have seen cattle numbers tumble. Some producers have gone out of business, with others moving cattle and operations further north into traditional dairy and tillage states. This is to get access to feed and milder climates.

All of this has led to US beef prices powering ahead. Prices paid to beef farmers across the Atlantic are working out at €0.80c/kg deadweight more than prices paid to Irish beef farmers. US beef prices have risen by approximately €1/kg in the past 12 months as supplies have continued to tighten.

For liveweight prices (the way the majority of beef farmers sell their stock in the US), prices have risen to €2.88/kg. A price of €0.80/kg was commonplace just three years ago.

USDA economist Dr Mildred Hayley told the Irish Farmers Journal that she expects the drought to continue which, in turn, will lead to shortages of cattle. Therefore prices are expected to remain high for the foreseeable future.

“All indicators point to beef prices continuing as they are for the foreseeable future, perhaps as far as 2017. The shortage in cattle numbers isn’t going to end any time soon. Numbers are low and won’t recover in the short term so it could well continue on as long as that,” she said.

Massive 11m tonne beef market

The US beef market is broken down into two sectors – food service (manufacturing) and retail. In total, the US beef market is 11m tonnes, split approximately 60%/40% between food service and retail.

In terms of importation of beef, the US takes in approximately 1m tonnes per year, with 70% of that made up of manufacturing beef.

Australia, Canada and New Zealand are the main sources of imported beef for the US. The US imported in the region of €4bn worth of beef last year.

The average person in America consumes 57.2lb (25.9kg) of beef per year, which is down 13% in the last five years. The fall-off in consumption has been attributed to the growth in poultry and pigmeat consumption as a result of the economic difficulties. Pork and poultry are cheaper protein alternatives to beef.

Grass-fed beef is a clear advantage for Ireland in the US market.

Whether it is rib eye, fillet or striploin, grass-fed cuts receive a much higher price. According to Bord Bia, a grass-fed cut of rib eye receives on average $23.97/lb (€44.28/kg), whereas the corn-fed equivalent averages $12.24/lb (€22.62/kg).

The grass-fed market makes up just 3% of the total beef market, but it is expanding according to Karen Coyle, especially in the eastern states where income levels are higher than average and where people are more willing to try new and different foods.

While the US imports large amounts of manufacturing beef, it is also a major exporter. It exported more than $6bn of mostly prime beef cuts to countries like Japan, Mexico, Canada, Hong Kong and South Korea in 2013.

The processes Ireland had to go through to get US approval

Steps in the Food Safety and Inspection Service (FSIS) Initial Equivalence Determination Process:

1. Country makes a request in writing to FSIS

FSIS responds and provides the Self Reporting Tool (SRT), a questionnaire designed to collect information about the country’s inspection system through responses from the country’s central competent authority relative to six risk areas: Government Oversight, Statutory Authority and Food Safety Regulations, Sanitation, Hazard Analysis and Critical Control Points (HACCP) Systems, Chemical Residue Control programs, and Microbiological Testing Programs.

2. Country submits completed SRT (document submission)

3. Document Review

• FSIS performs a technical review of the country’s inspection system based on a country’s SRT response and will request additional information as needed to ensure the FSIS regulatory objectives are met for each component.

4. On-Site Verification Audit

• When the document review process shows the country’s inspection system is satisfactory, FSIS conducts an on-site audit to verify through objective evidence that the country’s inspection system operates as documented to FSIS and achieves the U.S. level of protection.

o An audit report is prepared and shared with the country’s competent authority in draft prior to proceeding to rulemaking.

5. Public Notification-Proposed Rule in the Federal Register

• If FSIS’ evaluation of all data collected before, during, and after the on-site audit supports that the country’s inspection system is equivalent to the US’s system, FSIS will propose adding the country as eligible in the regulation (generally allow for a 60-day comment period).