International Beef Market And Trade


   The United States leads the world in producing high quality beef desired domestically and internationally which leads to a strong export market for muscle cuts. The export of muscle cuts adds value to the domestic beef industry as higher values can be captured in other markets. However, muscle cuts are not the only export item adding value to the domestic beef industry. Variety meats such as beef tongue, liver, heart, tripe, oxtail, and cheek meat have relatively low value domestically, but these products are highly sought after in countries such as Japan, Mexico, Egypt, and others.
   Alternatively, the United States does not produce a sufficient quantity of lean beef to meet domestic grinding demand. Most of the domestically produced grinding beef originates from slaughter cows (beef and dairy) and from trimmings of finished cattle. At times, packers grind cuts from the chuck and round, but these cuts generally have a higher value as a muscle cut as opposed to being ground. These circumstances lead the United States to importing lean grinding beef from countries such as Australia and New Zealand along with beef imports from Canada and Mexico.
   Import and export trade dynamics seem to constantly be changing, and there have been several factors impacting the import and export markets for beef. There are several issues at hand, but the focus is on major beef exporters Australia and Brazil as well as major beef importers Japan and China.
   The United States reopened the import market of fresh and frozen beef from Brazil in the fall of 2016. However, the market was subsequently shut off in the spring of 2017 due to an extremely high rejection rate of beef coming from Brazil. U.S. officials rejected more than 11 percent of beef shipments from Brazil during the short time period the market was open while the rejection rate from all other sources was about 1 percent. USDA made a statement that the rejection of the beef was not a food safety issue. Additionally, the Brazilian beef industry was rocked earlier this year with an investigation into bribery of meat inspectors while JBS, the largest meat company in the world, was fined for bribing state officials. Both of these incidents slowed exports from Brazil, but exports have picked back up in recent months.
   China is a major market that just reopened its borders to U.S. beef. It will be a market that will slowly develop the next few years. However, the United States may receive a boost from the decision by China to stop importing beef from six Australian facilities due to labeling issues. This situation is definitely in the wait and see mode.
   Australia’s cattle industry survives off its export market. Australia ships large quantities of beef to Japan, South Korea, China and the United States. Australia suffered severely from drought a couple of years ago which resulted in liquidation of much of the herd. The liquidation resulted in increased exports in the short term, but now has slowed exports from the country as producers attempt to rebuild the cattle herd. The rebuilding of Australia’s cattle herd and increased beef prices has impacted the United States in a couple of ways. First, Australia is a primary source of lean grinding beef for the United States and reduced production has resulted in fewer imports to the U.S. Second, the United States has increased exports to countries such as Japan and South Korea who generally source a large quantity of beef from Australia. These conditions are likely to change as the Australian cattle herd repopulates.
   The current issue in Japan is the tariff rate for U.S. beef. The United States has a tariff rate of 38.5 percent. This is compared to Australia’s tariff rate of 27.2 percent which will incrementally decline the next several years. The rate on frozen beef to Japan recently increased to 50 percent due to exceeding a quarterly trigger point and will stay at this level until the end of March. This largely impacts beef short plates that Japanese restaurants commonly use in their beef bowl item.
   The United States is in a good situation for the time being as it relates to imports and exports. However, it is integral for trade agreements to progress quickly and smoothly if the U.S. beef industry wants to stay competitive in coming years. ∆
   DR. ANDREW P. GRIFFITH: Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee
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