BEEF AT HOME AND ABROAD

MARKET DIVERSIFICATION, LOGISTICAL CHALLENGES AND TRADE POLICY OUTLOOK

from the U.S. Meat Export Federation

Representing a wide range of agricultural sectors, members of the U.S. Meat Export Federation (USMEF) gathered in a virtual format for the federation’s annual Spring Conference, held May 26-27.

USMEF Chair Pat Binger, who heads international sales for Cargill Protein North America, opened the conference by discussing the importance of market diversification in achieving sustained success for U.S. red meat exports.

“The most recent export results – which are from March – provide a great illustration of this,” Binger said. “Our leading pork market – China – was down significantly, yet pork exports still set new volume and value records. The leading beef market – Japan – was also down, but beef exports set a new value record and beef muscle cut volume was the largest ever. We know there will always be twists and turns in our top markets, which makes diversification extremely important.”

Binger noted that USMEF saw excellent growth potential in Southeast Asia, Central and South America and Africa, and in recent years has committed more staff and resources to these regions. This forward-looking approach has helped expand the global footprint for U.S. pork, beef and lamb.

USMEF President and CEO Dan Halstrom updated members on COVID-related restrictions in key export markets and gave a detailed recap of first quarter export results, which were highlighted by the record March performance. He said 2021 promises to be an outstanding year for red meat exports, but cautioned that the industry continues to face shipping delays and other logistical challenges.

“As optimistic as this report is, it could have been better,” Halstrom explained. “Port congestion, shortages of refrigerated containers, a shortage of chassis to move those containers, increasing freight rates and delays in ocean shipments continue to be a major constraint. Not only is this a constraint on shipments, the U.S. may run the risk of jeopardizing our longstanding reputation as a reliable global supplier of U.S. beef and pork.”

Halstrom said USMEF is working with industry partners to create greater awareness of these challenges among federal regulators and to propose solutions to improve the flow of outbound cargo.

On trade policy, Halstrom said USMEF is urging the Office of the U.S. Trade Representative (USTR) to conclude free trade agreement negotiations with the United Kingdom and Kenya, which were launched by the Trump administration. He noted that a U.S.-Kenya FTA could serve to unleash much broader trade opportunities in Africa.

Speakers outline trade policy challenges for U.S. agriculture

Trade policy issues were also the focus a keynote address by longtime Washington policy analyst Jim Wiesemeyer, who gave USMEF members an update on the Biden administration’s agricultural policies and priorities and the implications for trade. Wiesemeyer noted that the U.S.China Phase One Economic and Trade Agreement has delivered significant benefits for U.S. agriculture, but building on Phase One to complete a more comprehensive trade agreement with China could prove difficult. He offered similar thoughts on the U.S.-Japan Trade Agreement, which leveled the playing field for U.S. beef and pork in the Japanese market when it entered into force in 2020. Wiesemeyer said efforts to engage Japan in further trade negotiations could be complicated by Japan’s desire for the U.S. to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

The Biden administration’s trade agenda was also discussed in a meeting of the USMEF Exporter Committee, where exporters received a trade policy outlook from guest speakers Darci Vetter and Carmen Rottenberg. Now vice chair for agriculture, food and trade for Edelman, Vetter is a former chief agricultural negotiator for USTR. Rottenberg is managing director of Groundswell Strategy, a consulting firm she co-founded after serving as administrator of the USDA Food Safety and Inspection Service. Exporters also received updates on port congestion and container availability, efforts to expand U.S. beef access in South Korea and consultations with Japan on the safeguard threshold for U.S. beef. This safeguard triggered earlier this year, resulting in a 30-day period in which a higher tariff rate was imposed on U.S. beef cuts entering Japan.

Day 1 of the conference also included a meeting of the USMEF Feedgrain and Oilseed Caucus, where members received a spring planting report and grain market outlook from Dr. Sam Funk, Iowa Farm Bureau Federation director of agriculture analytics and research. USMEF Korea Director Jihae Yang discussed opportunities for U.S. beef and pork in Korea’s booming e-commerce sector and Joel Haggard, USMEF senior vice president for the Asia Pacific, gave an update on African swine fever in China and highlighted China’s rapidly growing appetite for U.S. beef.

The second day of the conference featured meetings of the USMEF Beef and Allied Industries Committee and Pork and Allied Industries Committee. Members received updates on U.S. beef marketing activities in China, Africa and the European Union. On the pork side, USMEF staff discussed emerging opportunities in Central America and Southeast Asia and provided an update on the competitive landscape in Japan. The Pork Committee meeting also included industry updates from the National Pork Board and National Pork Producers Council.

Conference closes with market insights from USMEF international directors

Binger kicked off the closing general session by highlighting the importance of USMEF’s experience in serving the red meat industry in international markets. With a number of new challenges facing the industry over the past year, he said this experience is more important than ever for maintaining and defending the international customer base while working to identify new opportunities.

In introducing four USMEF international directors, Jesse Austin, USMEF vice president for international marketing, echoed what members had heard throughout the two-day meeting: global demand for U.S. red meat is strong, especially through retail and e-commerce, while foodservice recovery is at different stages from market to market. In addition to Haggard and Yang, the panel featured USMEF Japan Director Takemichi Yamashoji and Gerardo Rodriguez, marketing director for Mexico, Central America and the Dominican Republic.

Common themes emerged from the four presentations, including the rapid digitization that is reshaping marketing channels and impacting consumer behavior. The directors also provided updates on COVID-19 case numbers, social restrictions and vaccination rates in their markets. Japan and Korea are currently experiencing new waves of infections with continued restrictions, while Mexico is finally seeing a decline in cases and a gradual loosening of restrictions. Except for international travel, Haggard reported that China is open with no restrictions.

Yang described the e-commerce boom in Korea, with food sales increasing sharply during the past year. Demand is very strong for convenient home meal replacement and restaurant meal replacement products as consumers prize convenience and quality. Yang also discussed the growing importance of eco-friendly messaging in Korea and highlighted recent USMEF marketing initiatives to promote U.S. industry sustainability.

Rodriguez discussed changes in Mexico and Central America, saying that in a short period of time consumers are becoming multi-channel buyers who now typically conduct research prior to purchase. He said lockdowns and social restrictions drove consumers to digital channels and businesses have been racing to adapt. Many companies that formerly operated business-to-business only are now marketing directly to consumers through digital platforms.

Yamashoji explained that e-commerce adoption and sales growth is occurring at a slower rate in Japan. The Japanese culture places great value on in-person experiences and face-to-face interactions, and consumers still prefer to go to a store to see and touch products before purchasing. Social media is booming, however, as consumers regularly seek new ideas on products to purchase, particularly for meal preparation.

Haggard talked about increased digitization and automation in China, noting that the marketing environment has grown much more complex. He pointed to livestreaming and gamification as recent examples of how consumers are seeking immersion into e-commerce “experiences” to buy products. Haggard assured members that USMEF remains focused on the fundamentals of market development, working to build core purchasing and distribution programs with partners in the trade, retail and foodservice sectors, while also adding new skillsets and directly reaching a greater number of consumers.

The next meeting of USMEF members is set for Nov. 10-12 in Carlsbad, California, where the 2021 USMEF Strategic Planning Conference will mark the federation’s 45th anniversary.

HERE TO HELP

The Rancher Technical Assistance Program is available to help with regulatory compliance and more

by Jack Rice and Noah Lopez from Western Resource Strategies LLC

California ranchers have many different roles, even if they only wear one hat. A cowboy in the morning, a mechanic at lunch, a veterinarian in the afternoon, a baseball coach in the evening and a bookkeeper late into the night, today’s rancher must have many different skills to care for their land, livestock, businesses and families. Even though their time is already filled, California’s ranchers are increasingly being asked to take on another role, that of a regulatory expert. On top of all the other commitments vying for a rancher’s time and energy, they are expected to understand and navigate a vast and complex landscape of regulatory obligations.

Mariposa rancher and California Cattlemen’s Association President Tony Toso puts it this way, “When you’re a busy producer and you need to get out and fix fence or do whatever job needs to get done that day, the last thing you have time for is to sit down and figure out how to fill out some complicated form.”

Unfortunately, it is more than just one form. The list of regulatory requirements is long and complex. It covers everything from water rights and stockponds to prescribed fire regulation and the vehicle code. While many explanatory resources exist, they are often hard to find and hard to understand, requiring extensive research and study. A quick Google search of any one of these issues will come up with so much information that one might not even know where to begin, let alone how to apply the information to a specific situation.

Regulations are not the only area where ranching is getting more complicated. For example, federal and state assistance and conservation programs exist to help ranchers, but researching, understanding and accessing these programs often takes more time than anyone has. The same is true for tax, insurance and other business issues. “Each of these things seems small but when added up take many hours and leave you spent, wondering if you’ve done everything you need to,” Toso says.

With ever growing concerns around water availability, land use and general sustainability the amount of

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time needed to research these issues can feel overwhelming. It certainly creates a burden on the California rancher that no one really has time for.

Seeing the clear need for assistance in these areas, the California Cattle Council provided funding to the California Cattlemen’s Foundation to implement a Rancher Technical Assistance Program (RTAP). The program is available to all California ranchers and is aimed at assisting ranchers as they navigate complex regulatory, environmental and business issues.

Ranchers with a question can contact RTAP and the team will work to help them understand what needs to be done and guide them to resources they need. For example, if a rancher has a question about stockpond measurement and reporting, the RTAP team can explain the compliance process and guide them to the appropriate forms and information. While RTAP is not able to do compliance work on behalf of ranchers, where additional assistance is needed, the program will help find the appropriate service provider. Sometimes the most helpful thing is knowing who and what to ask.

RTAP aims to go beyond providing general fact sheet information by providing more personalized assistance to ranchers. As Toso noted, “You can talk all you want in magazines and websites, but there’s nothing like when your able to visit with somebody and actually get some help from someone. I think this program will provide a valuable service and a great resource to the ranching community.”

The RTAP service will be provided by Jack Rice and Noah Lopez of Western Resource Strategies, LLC working in coordination with the CCA team.

Prior to starting Western Resource Strategies, LLC, Jack worked as an attorney with California Farm Bureau Federation for 11 years where he focused on water and environmental issues. In addition to consulting, Jack also owns and operates a small cattle and hay operation on the North Coast. Noah recently joined Western Resource Strategies, LLC after working several years in production agriculture and related businesses.

All California ranchers are encouraged, whether or not they are members of CCA, a local cattlemen’s association or any other membership organization, to reach out to RTAP with their questions. The program is dedicated to providing prompt responses and valuable service.

To reach out for assistance call the RTAP team at (916) 409-6902 or email rtap@wrstrat.com.

EXPECTED PROGENY DIFFERENCE

Why, what, when, and how, Part I

by Randie Culbertson, Ph.D., IGS Lead Geneticist

Expected progeny difference, or EPD, is defined as the expected difference between the average performance of an individual’s progeny and the average performance of ALL progeny. In the context of genetic improvement, EPD are very powerful tools for cattle breeders to make genetic improvement in their herds.

EPD VS. EPDS

Historically in editorial content, the ASA has used EPDs for the plural form of EPD. However, expected progeny differences is abbreviated EPD for both singular and plural forms. From now on, the ASA Publication will adopt the scientific approach of using EPD for both singular and plural abbreviations.

WHY

Why use EPD? Simple: genetic improvement! Underlying the performance of every animal is both environment and genetics. Every calf on an operation has a genetic propensity for performance of a trait. When genetic potential is lacking, even when an ideal environment is provided, the calf will have limited performance. To maximize performance, both environment and genetics need to be maximized.

Phenotypic selection for improvement can be utilized, but by selecting on phenotype the rate of improvement is significantly slower. When selecting on phenotype, you are selecting for the underlying genetics, but you are also selecting the environmental influences that cannot be passed onto offspring. Phenotypic selection gives no indication of how much of the performance is influenced by the environment.

EPD account for environmental differences and influences as well as genetics. EPD therefore help you to select for the heritable portion of a trait that can be passed to offspring. Using EPD to select for traits of interest will dramatically increase the rate of improvement, especially when compared to using phenotypic selection.

WHAT

In the most basic sense, an EPD is a solution resulting from the genetic evaluation. The evaluation is a series of statistical and mathematical models where performance, DNA, and pedigree information are included. These statistical and mathematical models are developed based on our knowledge of biology and genetic inheritance. Utilizing the information provided, these models are able to differentiate environmental influence from genetic influence to create a prediction of genetic potential for an animal as a parent.

When we consider an animal’s performance, there are two major influential components: genetics and environment. Environmental factors are any effect that is non-genetic and can range from management, to the physical environment, to the maternal influence of the dam on a calf. The environmental influences are important to an animal’s own performance, but they cannot be passed on to the next generation of calves.

Appropriately accounting for environmental factors is crucial for reliable EPD. When developing the models for a genetic evaluation, tremendous focus is placed on how to

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account for all non-genetic influences on a trait. The assignment of contemporary groups (animals raised in the same environment with the same opportunities to grow, conceive, marble, etc.) is crucial in accounting for the non-genetic components that would influence an animal’s performance.

With environmental effects properly accounted for, the evaluation solves for the genetic effects using animal relationships from the pedigree. The pedigree maps out all known relationships to an individual animal and the relatives of that individual. These relationships are assigned numerical values to represent the amount of genetics shared. For example, calf A shares 50 percent of his genes from his sire and 25 percent of his genes from a halfsib. If the half-siblings were inbred, the percentage of genes shared would be higher. The evaluation uses these relationship ties within the pedigree in conjunction with performance records and environmental effects, to solve for the genetic potential of animals for a given trait.

It is important to point out a biological law of genetic inheritance referred to as the law of independent assortment. The law of independent assortment states that the segregation of genes is independent during the formation of reproductive cells. In other words, each parent possesses two versions of a gene, but only one version is passed onto progeny. Which of the two genes that is passed onto each individual progeny is completely random. This randomness leads to genetic diversity and allows for the ability to make genetic improvement on traits. If we consider full sibs, these calves will share 100 percent of their genes according to their pedigree, but there will be differences in their performance. These differences in performance are in part attributed to the difference in gene versions inherited. In the absence of performance data, these two animals would have the same EPD, but once performance or DNA information is included in the evaluation, their EPD will begin to deviate from each other as the evaluation begins to account for the difference in the genes inherited from their parents.

How does DNA and genomic testing fit into all this? When an animal has genomic information included in the evaluation, it allows us to identify the actual genes, or markers, the animal has inherited. If we know that an animal has specific markers for a trait and how those markers contribute to a trait, this increases the reliability and predictive power of the EPD. If we consider the genomic results for a pair of full sibs, calf A has markers that contribute to additional pounds at weaning, while calf B has markers that do not contribute additional weight at weaning. As a result, there will be a deviation in their EPD since the genomics give a clear indication of which genes were inherited by each calf. Genomics will also increase the accuracy as it reduces the uncertainty of which genes a specific animal has available to pass on to progeny.

Submitting DNA does NOT replace the value of submitting phenotypes. Although DNA markers improve the accuracy of an EPD by reducing the uncertainty of the genes an individual has, these markers only explain a small percentage of the genetic variation of a trait. Traits included in genetic evaluations are controlled by thousands and thousands of genes, where genomics may only identify a small portion of the genes contributing to the phenotype. Reporting the phenotype as well as DNA will increase the overall reliability of the EPD. In the second article of this two-part series, we will focus on how and when it is appropriate to use an EPD. The “how” will focus on how to use EPD when making selection decisions for your herd as well as how accuracies and percentile ranks contribute to using EPD. The “when” will compare and contrast the use of phenotypes in context of making genetic selection.

AUTHOR’S NOTE: In the second article of this two-part series, we will focus on how and when it is appropriate to use an EPD. The “how” will focus on how to use EPD when making selection decisions for your herd as well as how accuracies and percentile ranks contribute to using EPD. The “when” will compare and contrast the use of phenotypes in context of making genetic selection.

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On June 15, Texas A&M Agricultural and Food Policy Center released a report quantifying the negative impact imposing new transfer taxes will have on U.S. cattle and beef producers. The conclusions of the study support NCBA’s position on tax policy for rural America that creates a viable business climate for family-owned businesses, including farms and ranches.

This study, requested by Ranking Member of the Senate Committee on Agriculture, Nutrition, and Forestry John Boozman and Ranking Member of the House Committee on Agriculture GT Thompson, reveals the significant impact two proposed bills would have on long-standing provisions in the tax code. The STEP Act would eliminate stepped-up basis at the time of death of an owner. The 99.5% Act would, most notably, decrease the estate tax exemption from the current $11.7 million per individual and $23.4 million per couple to $3.5 million per individual and $7 million per couple. The study proves that, because of their unique structure, family-owned businesses are particularly susceptible to changes in the tax code. In fact, if both bills were implemented 98% of the representative farms used in the study would have seen an average tax increase of $1.4 million.

“This study supports what NCBA has long advocated for—tax policy for rural America that encourages generational transfer, instead of acting as a barrier for the next generation of agriculturists to contribute to a safe, reliable and abundant food supply chain. From the results of the study, it is clear that these proposed bills would have significant and, in some cases, devastating effects on familyowned businesses,” said Senior Executive Director of Government Affairs Danielle Beck. “We appreciate Senator Boozman and Representative Thompson taking action to preserve sound tax policies and ultimately supporting the businesses that are the backbone of rural economies across the United States.”

With more than 40 percent of farmland expected to transition in the next two decades, Congress must prioritize policies that support land transfers to the next generation of farmers and ranchers. When doing this, it is imperative that lawmakers take into consideration the complexity of the implications of taxes on family-owned businesses. In the case of farms and ranches, the United States Department of Agriculture (USDA) reports that 91 percent of assets are illiquid. This means that to pay off tax liabilities at the time of an owner’s death, surviving family members may be forced to sell of land, farm equipment and sometimes parts of the operation. If farmland is lost, and therefore transitioned out of production, the environmental benefits that come along with the deliberate stewardship done by farmers and ranchers will be lost as well.

“Farmers and ranchers conserve nearly 900 million acres of crop and rangeland in the United States. The vital work done by cattle and beef producers to deliver an array of environmental benefits such as restoring wildlife habitat, sequestering carbon, and protecting and improving water quality, depends on their ability to stay in business. Federal tax policy that facilitates generational transfer and allows the next generation of producers to build upon the environmental and economic benefits of today’s farmers and ranchers is just as important for fifthgeneration producers as it is for first-generation, veteran and minority community producers who are breaking into and establishing a foothold in the industry,” said Beck.

UPCOMING CCA FREE & OPEN TO ALL!

WILDFIRE WORKSHOPS

July 28: Managing Wildfire Risk for Grazing Permittees on Federal Lands

August 26: Understanding California Law & Regulations Regarding Prescribed Burns & Utilizing Controlled Burns to Reduce Fire Fuel and Lessen Wildlife Risk

This virtual event is free, but registration is required. Learn more and register at www.calcattlemen.org/events.

This free event will be held in-person at the Paso Robles Inn. Dates are tentative and subject to change

This material is based upon work supported by USDA/NIFA under Award Number 2018-70027-28587.