A recently released report estimated the impacts of ceasing both U.S. beef exports and imports. The report was authored by Glynn Tonsor of Kansas State (K-State) University and Derrell Peel of Oklahoma State University (OSU). The report was commissioned by the Kansas Beef Council, Oklahoma Beef Council and Texas Beef Council.
Major conclusions of the report include:
• It is hard to overstate the complex and ever-growing role of beef exports and imports. Exports and imports are, to a large extent, conducted by different firms for different reasons precisely because they are mostly different sets of products. Beef exports and imports combine to provide opportunities to increase value in the U.S. industry by exporting products that have more value in foreign markets and importing products that can be sourced more economically in international markets.
• The mix of countries the U.S. exports beef to has developed, resulting in a more diverse, less concentrated export portfolio. Conversely, sources of U.S. beef imports have comparatively fluctuated less over time.
• Implied trade prices clearly show the U.S. receives a higher dollar per pound value for exports than it pays for imports, reflecting core differences in product types and the role of each transaction in adding economic value. From 2016 through 2020, the U.S. saw average annual unprepared beef exports of 2.05 billion lbs., an export value of $6.4 billion and an implied export price of $3.13/lb.
Conversely, 2016-20 average annual unprepared beef imports were 2.3 billion lbs., import value was $5.8 billion and the implied import price was $2.52/lb. These statistics clearly indicate participation in the global market provides a net economic gain.
• Export volume as a percentage of domestic production has grown substantially in recent decades, while imports as a share of domestic disappearance have varied much less.
• If both U.S. beef exports and imports declined by 10%, prices and quantities of feeder cattle and fed cattle would decline significantly. The cumulative present value of impacts over 10 years would be an economic loss of $12.9 billion to feeder cattle sellers and $6.8 billion to fed cattle sellers. Impacts would be distributed proportionately across states that produce feeder and fed cattle, with the largest beef cow and feedlot states seeing the largest negative impacts of reduced beef trade.
• Extrapolating the considered 10% beef trade loss case to a more extreme 100% loss scenario would suggest catastrophic impacts, broadly approximated at $129 billion for feeder cattle sellers and $68 billion for fed cattle sellers, reflecting a much smaller overall industry.
While the methods used here are not precise for such extreme situations, the take-home point holds: Entirely ceasing U.S. beef export and import trade would be economically catastrophic. As an overarching summary, the report concludes that the economic importance of beef exports and imports is substantial and growing with time. In the absence of beef trade, the entire industry would shrink significantly.
The report focuses on the impacts of losing international beef trade on domestic feeder and fed cattle sellers and does not consider spillover impacts on other sectors, such as allied industries (including input suppliers for row crops, feed, materials, etc.), local labor markets and agricultural lending. As such, this assessment likely understates the total impact involved with the possibility of losing U.S. international beef trade. The study focuses on beef trade, enabling a deeper and achievable assessment, leaving the trade of cattle, hides and other aspects of the broader industry to other projects.
The importance of beef trade continues to grow; beef exports increased to a new record in 2021 and have increased even more thus far in 2022. The full report and executive summary are available on the K-State University AgManager website at www.agmanager.info. — Derrell Peel, OSU Extension livestock marketing specialist
