Imports and Exports: The Global Beef Trade

By CnAgri2013-11-19 11:38:41 Print

Earlier this month, the U.S. Department of Agriculture updated the nation's stance on beef imports with regard to bovine spongiform encephalopathy (BSE), the fatal affliction in cattle commonly known as "Mad Cow Disease."

The U.S. is moving to adopt international standards set forth by the World Organization for Animal Health, which bases trade policies on the scientifically perceived risk of animals or animal products harboring the disease.

While many experts do not believe the move will significantly impact beef imports, the new stance may help smooth negotiations when it comes to beef exports from the U.S. in the coming years.

But the U.S. cattle herd has been shrinking since its peak of 115 million in the 1980s. Due mainly to feed prices and drought, today's population sits at just over 90 million, down to numbers not seen since the 1950s. At the same time, global demand for beef is on the rise as countries such as China strengthen economically and adopt more protein-heavy diets.

What kind of beef products does the U.S. import and what do U.S. beef producers ship to other countries? What trends are emerging and what rules dictate how the global beef trade plays out?

Roughly 8 to 10 percent of beef consumed in the U.S. is imported from other countries, while 11 to 14 percent of the beef raised in the U.S. is sent elsewhere. The global beef trade is a complex web of supply and demand, based largely on the differences in what each society values from their cattle.

In 2005, Japan reopened trade to beef from the U.S., but restricted it to cattle younger than 20 months of age. But that age limit really held exporters back, Schuele said.

Japan recently extending that age limit to 30 months, which Schuele said has been much less limiting on exports. This year, the beef trade has bounced back to pre-2003 revenue numbers in Japan.

Just in the year since extending the age limit, the volume of beef exports to Japan has increased by 52 percent and profits are up 35 percent, topping $1.1 billion in the first three quarters of 2013. That country has retaken its position as the top importer of U.S. beef.

"When you look at the results, it's pretty clear that was a big obstacle," Schuele said. "The prediction that we'd see a surge in exports to Japan has certainly happened."

Mainland China still has a ban on U.S. beef because of BSE. Not only does that close off a large potential market for exports, but China has now begun importing beef products from Australia, New Zealand and other countries that would have normally been destined for the U.S. in years past, said Bryant at the Meat Importers Council of America.

"China is certainly a major market for beef, but we don't currently have access," said Jim Herlihy, vice president of information services of the Meat Export Federation.

But many in the beef trade believe BSE is an issue of the past and will become even less of an influence on trade in the years to come.

"BSE has essentially been stamped out," Bryant said. "There are much more serious food-safety issues in general, not talking about beef specifically."

One issue impacting the beef trade more seriously than BSE, according to some exporters, is tariffs. Japan, for example, places a 38.5 percent tax on its imports.

South Korea has gradually been reducing its tariffs via a 15-year plan to decline from 40 percent down to zero, according to Schuele.

Still, this month's decision by USDA to adjust its stance on BSE could give American beef producers an easier time making export deals over the long run.

"It gives us firmer ground to stand on when we negotiate beef access with other trading partners," Schuele said. "We always maintained that we wanted our partners to follow sound science and be consistent with international guidelines when we weren't necessarily doing that ourselves when it came to BSE."

If China and Russia reopened their borders to U.S. beef, Schuele said he could see U.S. beef exports go from 14 percent of the total supply into the high teens. By comparison, the U.S. pork industry exports about 27 percent of its product.

Reducing trade barriers ultimately leads to greater availability of beef to customers around the world, he noted.

"To turn a profit," Schuele said, "the product needs to find the home that values it most."