updated 1/2/2004 11:29:20 AM ET 2004-01-02T16:29:20

Oregon cattleman Mike Partlow built a business selling beef products that Americans don't eat, from hooves to femur bones to stomach lining, all prized by Asian chefs.

Korean cooks slice steamed hooves into wafers for a meaty, gelatinous soup. Bits of large intestine go on the grill in Japan.

But after the discovery of mad cow disease in an American cow last week, this $600 million market — and Partlow's business selling so-called variety meats — has vanished, and won't return until export markets reopen.

America had been the world's largest exporter of these products before 36 countries banned U.S. beef imports last week. Many of the shipments went through West Coast ports, with the Port of Portland handling about 61,000 tons of variety meat in 2002.

The value of specialty products for Asia had added about $75 to the value of each slaughtered American cow, economists said.

Variety meats are loosely classified as non-muscle parts, such as brain, oxtail, tendon, heart, liver and tripe.

The collapse of this market is among the starkest examples of the economic blow mad cow disease has delivered to the American beef industry.

The business had grown quickly over the past decade after market liberalization in Asia, and had come to round out the mix of products carved from each slaughtered steer, Partlow said.

Now that the market has "vanished," Partlow said some parts will likely be rendered for raw protein for animal feed and other products until the export market reopens.

Twenty-five percent of Partlow's mostly export beef business had been in variety meats. The former rancher said his business has been devastated, with containers stalled in warehouses in the Midwest and in Asian ports. He said he lost more than $1 million, although the blow was cushioned by hedging on the futures market.

Some specialty cuts, such as thinly sliced tenderloin for Japanese hot pot, can be ground into hamburger and resold, Partlow said.

Other items, such as beef intestine, are a harder sell on American supermarket shelves.

American producers had come to rely on selling these bits overseas, said Dalton Hobbs, marketing director with the Oregon Department of Agriculture.

"It was an extremely important part of the beef and cattle industry in the United States, and it's hard to find alternatives," Hobbs said.

"There are only so many ethnic stores in this country," to sell such items, he said.

The largest export market for variety meats was Mexico, followed by Japan and Korea, said Lynn Heinze, vice president of the Denver-based U.S. Meat Export Federation.

The United States exported 405 tons of variety meat in 2002, mostly from West Coast ports, at a total value of $618.4 million.

The Asian market, critical for West Coast beef traders, hardly existed 15 years ago, Partlow said.

West Coast cattlemen began exporting to Japan soon after World War II, but the trade was lackluster and controlled by a Japanese government monopoly, the Livestock Import Production Corporation, Partlow said.

Prodded by the World Trade Organization, Japan abolished the monopoly in 1991. That opened the market for American ranchers, who quickly shipped beef parts unwanted at home, along with cuts popular in both countries, such as steaks. Variety meats account for about 20 percent of the beef market in Asia.

Some beef parts jumped dramatically in price.

Intestine, for example, sells for 20 cents a pound in the United States, but moves briskly in Asian markets at prices ranging from $2.50 to $2.75, according to the U.S. Meat Export Federation.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.95%
$30K home equity loan FICO 5.19%
$75K home equity loan FICO 4.58%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.40%
13.40%
Cash Back Cards 17.92%
17.91%
Rewards Cards 17.12%
17.11%
Source: Bankrate.com