Cattle producers prepare for China to open its doors to US beef
May 24, 2017
When the Chinese open their borders to American beef this summer, the promise of significant premiums and a substantial new market is real and is prompting many beef producers to go through verification programs to be among the first to export beef to the new market. Ranchers Connecting Ranchers and RaeMarie Knowles stand at the ready to help producers through the process.
Ranchers Connecting Ranchers (RCR) was established in 2014, after Knowles had spent six years in the cattle verification industry and hoped to better serve cattle producers. Knowles, who lives near Kiowa, Colo., is the managing partner and CEO of the company that provides verification services to beef producers who are hoping to participate in programs that might mean more dollars per head.
RCR verifies cattle for the U.S. Department of Agriculture's Source and Age Verified program and Non-Hormone Treated Cattle (NHTC). Additionally, RCR offers the Saudi Arabia Export Verification program and will also offer the verification for cattle intended for Chinese export as soon as those standards are released in the coming weeks. Verification can be completed for either ranches or feed yards through RCR.
Private label programs are also available to cattlemen through RCR to complement the USDA programs. RCR Natural and RCR Grassfed programs are available for producers seeking that designation. The Feed Bunk Ready Vaccination Verified program is a third-party verification program of vaccination, handling, and the weaning history of a ranch. When those cattle go to a feed yard, this verification can add to the feed yard owners' confidence in the quality of cattle purchased and lend additional credibility to vaccination programs. The RCR Natural and Gently Raised program satisfies consumer demands for beef raised naturally with an added handling component.
“On the USDA side, the large premiums for Source and Age verified went away when Japan opened their borders to cattle 30 months and under. There is still value because it shows buyers that they’re forward thinking and the buyer perceives those cattle to be higher quality.”
"On the USDA side, the large premiums for Source and Age verified went away when Japan opened their borders to cattle 30 months and under," she said. "There is still value because it shows buyers that they're forward thinking and the buyer perceives those cattle to be higher quality."
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In recent months, the premium for NHTC cattle has been approximately $4 per head as opposed to $35 or more per head at its 2008 inception. The NHTC and Source and Age Verified are cost prohibitive compared to the premium and are typically only completed by large producers. However, Knowles said, the Saudi Arabian beef and Chinese beef hold promise to be excellent premiums.
"China has the potential to be pretty substantial because we're marketing to 1.4 billion Chinese consumers," she said. "In 2003, it was a totally different demographic. There wasn't nearly that amount of people or that amount of people with the disposable income to pay for animal protein from the U.S."
Forward thinking ranchers, the kind Knowles said makes up her clientele, who participate in the verification programs will see a decent premium for their efforts. Even those who do not participate in the programs or market beef to the Chinese markets will reap the reward of an invigorated cattle market.
"Even in the beef cuts we think they're going to want specifically, we could send them all the beef we produce in the U.S. and not meet their demand," she said. "It's a huge market for us and there will be, more than likely, verification requirements tied to those products."
July 16 is the anticipated latest date that China will open its borders to U.S. beef and cattlemen hoping to participate in the export market and verification companies are all anxiously awaiting requirements so the process can begin in earnest.
"Based on the basic idea of supply and demand, we're going to see the markets for even conventional beef jump up so it's a win-win all the way across the board," she said.
The Chinese market also has the potential to add value to beef carcasses as the demand in China for cuts like tongue and other variety meats is significantly higher than in the U.S. Knowles and her counterparts in verification programs are anxiously awaiting the details to be released so producers can market the type of cattle that the Chinese market demands.
Source and Age Verified offers traceability and age verification and is the simplest of the programs, requiring a calving date and identification that traces back to the ranch. Group identification and brands can be used if the cattle go to an approved feed yard or location. Otherwise, EID tags must be used if moving to an unverified location. Cattle in the NHTC program must have EID tags and move directly from the verified ranch to an approved or verified location. This program also has a Source and Age verification component requiring cattle to be under 30 months of age.
All verifications with the exception of Source and Age Verification on the ranch require an onsite review from RCR staff. Knowles insists that RCR staff all be well-versed in the cattle industry and all are ranch raised. The verification process can be a bit daunting so every effort is made to streamline each step.
"It is important for potential customers to know that our auditors are top of the line industry professionals who are ranch-raised and appreciate the culture," she said. "We try and put the ranchers and feeders at ease as much as possible."
Producers who sell cattle through video marketing like Superior Productions tend to gravitate toward verification programs as well as producers who market to feed yards who participate in verification programs. The premiums are not paid through more traditional, local marketing but, Knowles said, getting the cattle in front of buyers specifically looking for cattle that qualify for the different programs equates to premiums.
Ryon Massey, a cattleman from Kiowa, Colo., was among the first to go through the verification process with Knowles and RCR. Massey markets about 80 calves as a split load on Superior and anticipates that his return on investment will continue to grow as his operation grows and the market changes with the addition of the Chinese market.
Massey completed the NHTC verification on his ranch and said a process that could have been daunting and stressful was quite the opposite.
"I did the NHTC verification and was curious to see how it worked," Massey said. "Down the road, I'm going to pursue more of it. I'm just trying to add some value to those calves and RaeMarie and her folks know the business from a grassroots level. They know what it takes to raise a calf from point A to point B."
The requirements for Saudi Arabian beef exports have been released and American producers have begun both the verification process and exporting to the market. These verification requirements have an Source and Age component and the calves cannot receive any prohibited animal protein post weaning. For the entire lifetime of the animal, they may receive supplements but tallow must be beef tallow and it must be sourced from an approved rendering facility.
"For Chinese beef, going all the way back to 2015, there have been all sorts of ideas thrown around," she said. "There is more than likely going to be a source component, specifically tied back to the ranch. They're not necessarily worried about what happens between ranch and packer but will want the sources verified for the ranch and packing facility."
Hormones will also likely be a concern for Chinese beef, specifically Beta-Agonists. According to Penn State Extension, Beta-Agonists bind to receptors on fat cells in the cattle's body and redirect and reduce the metabolism of fat, resulting in more muscle and less fat. Beef imported from Australia and Canada to China is currently not allowed to contain Beta-Agonists and Knowles said testing is likely.
"We anticipate having requirements and an understanding of the protocol as early as the first week of June," she said.
— Spencer is a freelance writer from Wiggins, Colo., where she and her family raise cattle and show goats. She can be reached at email@example.com or on Facebook at Rachel Spencer Media.