China’s eCommerce to sell Montana beef | TSLN.com

China’s eCommerce to sell Montana beef

MSGA, along with Cross Four Ranch, and JD.com, signed a memorandum of agreement (MOA) to facilitate collaboration on Montana sourced beef to China as well as the potential investment in Montana, on November 8. Photo by Carrie Stadheim

President Donald Trump's visit to China has delivered an early Christmas present to the state of Montana, with a $300 million beef deal, that most of the industry organizations are hailing as a potential industry game changer.

The deal, between the Montana Stockgrowers Association and JD.com, a Chinese eCommerce firm, is proposed for an initial three years, with a minimum commitment of $200 million in Montana beef to be imported by JD.com from MSGA members, and $100 million to be invested in a processing facility. If fulfilled, it is estimated that JD.com's purchase of beef will increase Montana beef export sales by as much as 40 percent in 2018.

MSGA, along with Cross Four Ranch, and JD.com, signed a memorandum of agreement to facilitate collaboration on Montana sourced beef to China, as well as the potential investment in Montana, on Nov. 8.

This agreement transpired following Daines' agricultural roundtable where Chinese Ambassador Cui Tiankai, Chinese business representatives, and Montana agricultural leaders discussed potential opportunities for expanding Montana beef exports.

“The U.S. and China are the world’s two largest producers and consumers of food, and together, both countries play a key role in helping to achieve food security not only for their respective populations, but for the globe.” Archer Daniels Midland Co.

"While there are details to be finalized, this MOA represents a great step in the right direction for Montana ranchers and the state of Montana," said Errol Rice, Executive Vice President of MSGA. "The Montana Stockgrowers Association thanks Sen. Daines for his work on expanding opportunities and access to overseas markets for Montana ranchers, particularly in lifting the ban on U.S. beef in China earlier this year."

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Stockgrower's Executive Vice President, Errol Rice and Miles City Rancher, Fred Wacker were in Beijing for the signing ceremony.

"Finding additional opportunities for U.S. beef in foreign markets is crucial to strengthening the bottom line of U.S. cattle producers. We commend Errol Rice, Fred Wacker, the Montana Stockgrowers Association and Senator Steve Daines for their efforts in bringing this partnership to Montana. This is exactly the sort of forward-thinking solution that is needed to open up new markets for U.S. beef products and ensure that we leave a successful and profitable future for generations of Montana producers. We encourage other parts of the country to follow this example and seek out their own innovative solutions to increase market access, and therefore economic opportunity, for U.S. cattle producers," shared U.S. Cattlemen's Association President Kenny Graner.

Montana's U.S. Senator, Steve Daines, has worked diligently to move this agreement along.

"This landmark agreement has the potential to substantially increase Montana opportunity and agricultural exports to the fastest growing overseas market for beef," Daines stated. "This is a win for Montana's hardworking ranchers."

This agreement follows Daines' agricultural roundtable in Belgrade, Montana where Chinese Ambassador Cui Tiankai, Chinese business representatives and Montana agricultural leaders discussed potential opportunities for expanding the relationship between Montana producers and Chinese consumers.

"The Montana Stockgrowers Association thanks Sen. Daines for his work on expanding opportunities and access to overseas markets for Montana ranchers, particularly in lifting the ban on U.S. beef in China earlier this year. While there's a lot of work that needs to be done, this MOA represents a great step in the right direction for selling more U.S. beef in China and developing productive relationships between Montana ranchers and Chinese consumers," Rice wrote in a statement.

Montana's last commercial-scale meat packing plant, Midland Packing Co., closed in 1985. A Canadian company, Friesen Foods is also in the planning process for a Great Falls, MT slaughterhouse, employing up to 3,000 people.

"China's market has the potential to be a game-changer for Cross Four Ranch and Montana ranchers more broadly. The MOA shows how much interest there is in China for high quality cattle and beef from Montana and the U.S. and I appreciate Senator Steve Daines' efforts to help connect me with potential Chinese buyers," Wacker said.

While the focus is on Montana beef, this kind of beef volume would draw cattle from other states, according to Jess Petterson, USCA's Executive Vice President.

"If this goes through, you're going to see a regional movement of cattle," Petterson said.

The U.S. was cut out of exporting to China from 2003 to June of this year, when the U.S. Department of Agriculture finally reached an agreement with Chinese officials on a protocol to allow the U.S. to begin the beef exports to China. The 13-year ban was the result of a 2003 Washington state case of bovine spongiform encephalopathy from an imported cow.

With more questions on the deal, than answers at this point, producers are eager for Rice and Wacker to get back from China to fill in the blanks.

"I knew last week that there was going to be some big news this week," Shane Eaton, board of directors with the Montana Stockgrowers Association shared, adding that he was looking forward to finding out more details. "It shows that China is committed to getting beef from the U.S," he added. "The doors are opening."

China imports have increased from $275 million in 2012 to $2.5 billion in 2016. The United States is the world's largest beef producer and was the world's fourth-largest exporter, with global sales of more than $5.4 billion in 2016. Until the ban took effect, the U.S. was China's largest supplier of imported beef, providing 70 percent of their total intake.

"International trade benefits the entire beef industry and this week's announcement by Montana producers demonstrates the enormous potential in the Chinese market. NCBA worked for years to reopen China to U.S. beef exports and we're pleased to hear that it's already benefiting Cattlemen and women," Kendal Frazier, NCBA CEO, shared in a statement.

"NCBA will continue to work hard to open new markets and expand our foothold in existing markets so America's beef producers continue to prosper."

But not all industry groups are hailing the agreement as a beef producer victory.

R-CALF USA CEO Bill Bullard compared the deal to what he calls the "communist government-backed Chinese acquisition of the [U.S.] largest pork producer, Smithfield Farms."

"It is contrary to conservative principles and fundamentally wrong for a U.S. Senator to invite communist China to begin colonizing Montana's cattle industry," Bullard wrote.

Last month, Global pork company WH Group Ltd., announced that its subsidiary, Smithfield Foods Inc., entered into a tripartite strategic partnership with Henan Shuanghui Investment and Development Co. Ltd. and JD.com. The announcement included plans that JD.com would become the exclusive online sales platform for Smithfield's pork products in China.

"Through this partnership, Smithfield Foods will take yet another step in developing its e-commerce business and expand its presence in China, as we meet consumers where they shop," said Kenneth Sullivan, president and CEO of Smithfield.

R-CALF USA, along with other concerned groups, sent a letter to Congress on Oct. 4.

"We wrote in our letter to Congress that continuing to allow the extraction of U.S. resources from rural communities by foreign companies should be raising alarm bells," Bullard said.

"China is not a market economy, it does not respect capitalism, and it is a fierce and formidable mercantilist that is weakening America' manufacturing and production sectors through currency misalignment, exploitation through investment in critical resources, and its use of state-owned enterprises that masquerade as private companies."

But despite concerns such as Bullard's, the growth in a global economy continues and has been steadily rising over the past 12 months, and U.S. agriculture is on that table.

The international Monetary Fund forecast that the world economy would expand 3.6 percent this year, up from 3.2 percent in 2016. And the U.S. economy posted second and third quarter growth rates of 3.1 and 3 percent, according to reports.

A number of other deals have also been procured during President Trump's latest visit to China, including another ag commodity. The United States soybean industry has signed letters of intent worth $5 billion with Chinese importers covering the purchase of an additional 12 million tons of soybeans in the 2017/18 marketing year.

Archer Daniels Midland Co. (ADM) and COFCO Group signed the MOU.

"The signing is a strong example of our countries' increasingly productive and mutually beneficial trade relationship," ADM said. "The U.S. and China are the world's two largest producers and consumers of food, and together, both countries play a key role in helping to achieve food security not only for their respective populations, but for the globe." F

Senator Daines timeline of events leading to China deal:

On September 9, 2017, Daines hosted Ambassador Cui TianKai in Montana to discuss opportunities to ship Montana beef to China.

On June 12, 2017, Daines announced that an agreement has been reached to begin shipping U.S. beef to China.

On June 10, 2017, Daines wrote an editorial following the Montana Ag Summit about the importance of agriculture and trade to the future of jobs in Montana.

On June 1, 2017, Daines co-hosted the Montana Ag Summit in Great Falls, Montana that brought together the nation’s top agricultural leaders: the U.S. Secretary of Agriculture, Sonny Perdue, and the U.S. Senate Ag Committee Chairman Pat Roberts.

On May 12, 2017, Daines announced that an agreement was reached to open Chinese markets to U.S. beef no later than July 16, 2017.

On April 17, 2017, Daines returned from leading an official congressional delegation trip to China where he hand-delivered four Montana steaks from Miles City to Chinese Premier Li Keqiang and pressed Chinese officials to finalize negotiations and re-open Chinese markets to U.S. beef. Daines also hand-delivered a letter from the Montana Stockgrowers Association to Premier Li.

On April 5, 2017, Daines led 38 Senators in a letter to President Donald J. Trump asking him to prioritize reopening China’s market to U.S. beef in his discussions with Chinese President Xi Jinping.

On March 23, 2017, during a Senate Agriculture Committee hearing, Daines pressed Secretary of Agriculture Sonny Perdue on the importance expanding trade opportunities for Montana agriculture.

On March 9, 2017, Daines met with the United States Trade Representative, Robert Lighthizer. During the meeting Daines hand-delivered a letter urging him to prioritize opening Chinese markets to U.S. beef.

On February 1, 2017, Daines met with the Secretary of the U.S. Department of Agriculture, Sonny Perdue and discussed expanding access to foreign markets for Montana agriculture, including reaching an agreement to allow Montana beef into China.

On January 18, 2017, Daines met with the Secretary for the U.S. Department of State, Rex Tillerson, where they discussed opening Chinese markets to U.S. beef imports.

On January 4, 2017, Daines met with the Secretary for the U.S. Department of Commerce, Wilbur Ross, urging him to prioritize expanding access to foreign markets for Montana agricultural products, including opening China’s market to U.S. beef.

On December 6, 2016, Daines wrote to then President-elect Trump urging him to level the playing field for Montana producers by working to open Chinese markets to U.S. beef.

On October 5, 2016, Daines penned an editorial on the importance of ending the ban on U.S. beef imports for Montana producers.

On September 22, 2016, Daines welcomed news that China would begin to end the ban on U.S. beef that began in 2003.

In May 2016, Daines led a congressional delegation fact-finding mission to China. During the visit, the first issue Daines pressed the Chairman of the Standing Committee of the National People’s Congress Zhang Dejiang on was ending the ban on U.S. beef.

Daines also hand-delivered a letter from the Montana Stockgrowers Association to Zhang.

On July 13, 2016, Daines pressed Chinese Ambassador to the U.S. Cui Tiankai on opening open their market to Montana beef.

Daines spent almost six years in China with Procter and Gamble expanding markets for American brands and products to Chinese consumers.

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