Gone Global U.S. beef export market accounts for a significant and growing portion of cattle value. By Wes Ishmael
Although it can appear straightforward, the economics surrounding U.S. beef exports and imports is complex. Let’s start with this. U.S. export value per head of fed cattle last year was $309.75, according to the U.S. Meat Export Federation (USMEF). That represents roughly 20% of the value of fed cattle. It’s more important to calf prices.
“We’d lose a third of the value of your calves if we lost our export markets,” said Randy Blach of CattleFax, at last fall’s annual Cat Symposium on Excellence in Ranch Management, hosted by the King Ranch Institute for Ranch Management. Arguably, exports represent even more economic impact, given the fact U.S. beef production increased by an average of about 1.5 billion lbs. per year
since 1990, according to CattleFax data. At the same time, U.S. consumers have record-large supplies of pork and poultry to choose from. Although the U.S. is the world’s largest beef producer, largest poultry producer and third largest pork producer, it exports far less beef production than most other countries. For instance, Blach explained Australia exports about
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72% of its production versus the estimated 12% of U.S. beef production last year, not counting beef variety meats.
Imports Add Value to U.S. Beef U.S. beef imports are where the notion of international trade starts to get sticky for some folks. In simple terms, the argument goes something like this: “Why import beef, which adds to domestic supply, and all else being equal, should pressure domestic beef prices?” Putting other considerations aside, the fact is that all else is not equal. “The entire reason for imports and exports comes down to the market seeking the highest value for each product produced and efficient use of resources during the production phase,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in a paper from a couple of years ago. “Thus, when one thinks about the beef products demanded by consumers in the United States, it generally comes down to steaks and ground beef. There are domestic consumers who demand round roast, chuck roast, and brisket, but the primary demand is for high quality steaks (Choice and Prime) and ground beef.” Most beef imported to the U.S. is lean trimmings, used to blend with fatter U.S. beef in order to provide domestic consumers with ground beef of the lean percentages they prefer at affordable prices. Other domestic lean trimmings come from dairy beef. “Depending on the prices of certain cuts of beef, cuts such as the round and chuck are also ground to meet ground beef demand, but this is a fairly expensive endeavor considering these whole muscle cuts may have a higher value in the export market,” Griffith explains. Depending on whose abacus you consult, ground beef represents just over half of all beef consumption in the U.S. Fail to provide consumers with the volume demanded, and beef consumption declines. Besides, international markets covet some beef products that U.S. consumers care little about. Think here of things like the short plate, tripe, beef tongue, heart and liver. “For example, short plate could be ground and get about $1.50 per pound here, but because it’s a high demand item in Japan, they will pay double that
