Beef trade between China, U.S. in the works again
Some news outlets may have jumped the gun, with announcements that China had reopened the market for U.S. beef products, but the deal, even though it has yet to be signed, sealed and delivered, has U.S. ag economists and beef producers hopeful that it might really happen this time around.
President Trump met with Chinese President Xi Jinping in Florida, to begin hashing out the details of a plan to help reduce China’s massive trade surplus with the U.S. Now in the hands of negotiators, the next step is to work out the details within a 100-day time frame, according to White House spokesman Sean Spicer.
The 13-year ban started in 2003, following a confirmed case of bovine spongiform encephalopathy (BSE). In a recent note to investors, Stephens Inc. analyst Farha Aslam urged caution, pointing out that China has twice before agreed to grant market access to U.S. beef, but regulatory hurdles have prevented any real trade to materialize.
Last September, similar discussions had the U.S. Meat Export Federation also telling industry stakeholders not to get their hopes up yet. China conditionally lifted the import ban then, but to date, there has been little American beef exported to the country, in part because of the U.S.’s traceability program, UMEF said.
Thad Lively, senior vice president for trade at USMEF told reporters that, in order for Chinese supermarkets to sell American beef, authorities need to approve proposed rules on issues including the traceability of individual animals.
NCBA, USMEF, and the North American Meat Institute sent a letter to Trump March 27, hoping to encourage him to make beef a priority of the meeting.
“The foreign market with the greatest growth potential — China — remains closed to U.S. beef and beef products, even as China imports large and growing volumes from our competitors,” the groups wrote. “We appreciate your leadership on this matter.”
Unfair U.S. trade relations with China were a campaign point of Trump’s, and he threatened to levy Chinese products by as much as 45 percent.
Following the meeting of the two leaders, media coverage and discussions have analysts sharing the huge potential benefits.
Global AgriTrends calculates the greater China region (China, Hong Kong, Vietnam) as a $7 billion market, according to Aslam. With a population of more than 1.3 billion people, China presents a huge potential market for U.S. beef. By comparison, the U.S. population is 324 million, according to the U.S. Census Bureau.
“As the most populated country in the world, with a large and growing middle-income class, gaining direct access to China is one of the most positive developments the U.S. beef industry could ask for,” said Glynn Tonsor, livestock marketing specialist with Kansas State University Research and Extension.
In comparison, over the past 10 years, Japan, population 127 million, has been the biggest importer of U.S. beef, Tonsor said.
He and other economists expect overall meat demand to grow at a faster rate outside the U.S. than inside the country. Given that, any and all developments such as this, which increase viability of exporting U.S. beef, are beneficial.
“While we live in an era of fairly widespread skepticism around the net benefits of global trade, it is important to recognize a key fact as a U.S. cattle producer: Any time you can sell your product to consumers who most value it, the higher the collective sales value of beef products (and the cattle they originate from) will be,” Tonsor said. “Gaining — and retaining — access to a larger set of candidate consumers is vital to the ability to accomplish this. This point is only reinforced when one appreciates the vast diversity of beef products that come from a sole animal and how this aligns with a corresponding assortment of consumers who most value each of those products.”
According to Kent Bacus, NCBA’s director of international trade, China has one-fifth of the world’s population and is the second largest importer of beef.
“We’re thankful for President Trump for highlighting beef access to China as part of his first meeting with the Chinese president. Considering there are a lot of other issues that need to be addressed from security to trade, we’re just happy that beef was a priority issue. Even though there has been a nominal lifting of the ban from China, we are still unable to send beef into the Chinese market because we still face some technical barriers of trade. Over the next 100 days, the Chinese and U.S. leaders are going to identify a path forward where they are going to address some of these technical barriers like traceability, so we still have a little bit of time before we see beef enter the Chinese market,” Bacus said in an NCBA podcast.
“China currently consumes around 13 percent of the world’s beef and is expected to increase their imports of red meat by nearly 24 percent in 2016, as compared to previous years. USCA members are eager to capitalize on this growing demand for meat products,” said U.S. Cattlemen’s Association President Kenny Graner.
But USMEF’s Vice President of Communications, Joe Schuele, is still cautious on any victory lap.
“China is the fastest-growing beef market in the world, taking about $2.6 billion in imports last year. It is also the only major export market that never reopened to U.S. beef following the 2003 BSE case,” Schuele said. “So gaining access to China would be an important step forward for the U.S. beef industry and would contribute to our overall export growth. But it’s difficult at this time to project how much U.S. product will be exported to China, because we do not yet know what the specific export requirements will be. Those requirements will determine how much of the U.S. beef supply is eligible.”
A number of senators, including Sens. Steve Daines, R-Mont., and Jon Tester, D-Mont., have also been urging Trump to prioritize U.S. beef access to China. In a letter, the senators emphasized the value of an agreement between the countries.
“Opening this market to U.S. producers would create substantial opportunities for farmers and ranchers across the country as China has an import market in excess of $2.5 billion and is the second-largest importer of beef in the world,” the senators wrote. “The current environment of low commodity prices further emphasizes the significance of trade to U.S. farmers and ranchers and the beef industry overall.”
The senators also underscored the quality of U.S. beef and the importance of expanding trade opportunities to increase economic opportunity for farmers and ranchers.
“We are confident that given a level-playing field, U.S. farmers and ranchers can compete successfully and increase exports in any foreign market,” the senators continued.
The support of the senators has been praised by producers and industry stakeholders.
“When China announced that they would lift their ban on U.S. beef, Montana ranchers were elated by what we hoped would lead to expanded export markets and corresponding price increases. However, these potential opportunities are yet to be realized. We thank the senators for sending this letter and hope President Trump will take the opportunity to raise this important issue with President Xi,” wrote Nicole Rolf, national affairs director, Montana Farm Bureau Federation.
“USCA appreciates Sen. Daines and Sen. Tester for leading this effort and thanks each and every senator for signing on this letter. Market access to China is crucial for U.S. cattle producers. Success in this arena will drive increased optimism in the cattle market and increase demand for U.S beef,” Graner said.
While the general consensus of the market reopening is positive, R-CALF USA has taken a slightly different view of the news, worrying that the financial benefits won’t reach the farmers and ranchers, and could pose a danger to the U.S. beef industry, and taking the opportunity to ask for country of origin labeling to be revisited.
“Because the dangerous foot-and-mouth disease is endemic in China, we need assurances from the Secretary of Agriculture that we are not entering a quid pro quo with China as we did with Brazil, with which we agreed to relax our FMD restrictions in return for renewed access to the Brazilian market. Doing this also with China would expose our domestic cattle herd to an unacceptable risk,” R-CALF CEO, Bill Bullard said.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User
Part 4 of a six-part series about basic water law in the United States, predominately in the western part of the country, and how it affects this finite resource. Water law can be traced back…