McDonald's testing beef from Australia, New Zealand

McDonald's is joining Burger King and other fast-food chains in buying beef from overseas, citing a shortage of the U.S. meat that's lean enough to make their burgers.

"The supply just isn't there," said McDonald's Corp. spokesman Walt Riker.

For now, McDonald's is testing the imported beef in about 400 of its 13,000 U.S. restaurants, all in the Southeast. Customers won't know the difference, he said. "We're running a small test using some beef that is top quality."

Hamburger chains make their patties by mixing lean beef -- meat that's no more than 10 percent fat -- with low-cost fat trimmings that are a byproduct of packing plants. The resulting product is similar in fat content to the ground beef typically sold in supermarkets.

McDonald's is the biggest single buyer of both U.S. and Australian beef, which the chain uses extensively outside of the United States.

Lean beef from Australia and New Zealand sells for 5 cents to 20 cents per pound cheaper than U.S. product.

"I'm a little surprised that McDonald's has not acted before this to secure their supply lines," said Steve Kay, editor of Cattle Buyers Weekly. "I can only surmise that they felt very concerned about the political fallout."

Grass, not grain

Australia and New Zealand have plenty of lean beef because their cattle are fattened for market on grass, not grain, as U.S. cattle are. Grain-fed cattle make for juicier steaks because they are higher in fat.

In the United States, the lean beef that the fast-food chains need for their burgers usually comes from female cattle that are slaughtered for ground beef when they are too old for breeding or producing milk. Ranchers have been cutting back on their cow herds for several years, so now there isn't enough of the animals to meet the burger industry's demands.

There is no end in sight to the shortage of U.S. lean beef. After several years of strong beef prices, U.S. ranchers are starting to build their herds again and that means keeping some of their female calves for breeding rather than sending them to feedlots to fatten for slaughter. Fewer than 5 million cows are expected to be slaughtered this year, down from 7.3 million in 1996, according to the Agriculture Department.

Beef imports have risen by a third since 1996, but they are tightly restricted under a law that protects the American ranchers from foreign competition.

Meeting quotas

Australia reached its U.S. quota of 378,000 metric tons by December last year. New Zealand filled its limit of 213,000 metric tons in 2000 and came close to reaching it again last year. The quotas could be filled even earlier this year, industry analysts say.

The National Cattlemen's Beef Association will oppose any attempt by Congress or the Bush administration to allow Australia and New Zealand to increase their U.S. exports. Instead, American producers are trying to persuade the fast-food industry to make its burgers from more expensive but leaner parts of the cow.

"We're more than willing to work with the quick-serve restaurant chains to come up with solutions to their supply needs that involve a domestic product," said Kendal Frazier, a spokesman for the producers' group.

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On the Net

National Cattlemen's: www.beef.org