Exports and trade are vital to American agriculture. We have more than realized the effects it has had on markets since President Donald Trump started implementing his trade agenda, which appears to be working. Last week the administration announced that they have completed the United States, Canada, Mexico Agreement (USCMA).
Some folks say it was a great deal, others say it wasn’t, and still others say it was much to do about nothing. I’m just glad it’s over. Beef and pork will continue to travel between the three countries tariff-free, which is what we had before the deal. The other parts concerned the auto industry, which I really didn’t pay much attention to. I thought it was interesting that some auto components were required to be made with $16-an-hour Mexican labor. Most Mexican workers earn just a couple bucks a day, which is why manufacturers were there in the first place. I’ve got a brother-in-law who crosses the border every day to manage an assembly plant in Mexico.
Perhaps the best trade deal for U.S. beef producers was KORUS, the U.S.-Korea Free Trade Agreement. Tariffs on beef were dropped from 40 percent to 21 percent and will be eliminated by 2026. South Korea’s beef imports from the U.S. have increased 42 percent so far this year, and the value of that product was 60 percent higher than a year ago. It’s a great day for any business when you can sell more product for more money.
August beef exports continued to break records, valued at over $750 million. Total beef exports to all countries was up 11 percent for the year, and value was up 16 percent. Beef export markets contributed $320.92 per head on fed cattle in August and $318.66 for the entire year. You can’t tell me that export markets aren’t important to U.S. cattle and beef producers.
Dan Halstrom, president and CEO at the U.S. Meat Export Federation, said, “U.S. beef exports continue to achieve tremendous growth, not only in our mainstay Asian markets but in the Western Hemisphere, as well. USMEF is excited about the recent market access developments achieved by the Office of the U.S. Trade Representative (USTR) and USDA, with favorable terms being preserved in Mexico, Canada and South Korea, and trade talks getting underway with Japan. A trade agreement with Japan would bring opportunities for even greater expansion as U.S. beef becomes more affordable for Japanese consumers and is back on a level playing field with Australian beef.”
When the Trump administration starts negotiating with Japan I’m certain that beef will be on the table for tariff discussions. We will seek tariff reductions at least equal to the Australian beef industry. When we were going to embark on the Trans-Pacific Partnership, we would have seen big tariff reductions for U.S. beef in several countries. Australia has a competitive advantage in the Japanese market—8 percent compared to the 38 percent tariff we have on fresh beef. We currently supply Japan with around 50 percent of their chilled imports.
I’d say that we’re doing well in the Japanese market even though Australia has a huge tariff advantage. The export growth for U.S. beef has been remarkable, and it’s not just beef. U.S. beef is clearly being differentiated in international markets. We’re building strong supply chains throughout the world and they will only get stronger. USDA says that we’re exporting 13.5 percent of our beef production, which is up a point from a year ago. Could we eventually get to 25 percent? It’s possible.
In a week or so the USTR is to start negotiations with the European Union (EU) on U.S. beef exports. To start the process, all 28 member countries must agree to start talking. In 2009 the EU approved a quota that would accept 45,000 tonnes (99 million pounds) of hormone-free beef. The only problem was we had to share that quota with several countries that produce primarily grass-fed beef. Initially the U.S. filled most of that quota but has slipped to 30 percent as other countries got more competitive in that market. They will talk about carving up that quota and giving the U.S. a defined amount. But the real question is if we can get over the hormone-free issue, which has been around since 1981.
I would like to see the EU read the science on hormones again and get over it. Then I think they need to think about grass-fed beef vs. grain-fed Choice beef, the real American Beef Experience. Producing high quality grain-fed beef is key to expanding markets internationally and domestic. — PETE CROW
