U.S. beef trade
July 2, 2010
Trade is an often discussed or cussed topic around the coffee shop and a topic I have not written about for some time. It often seems to me that some of the heated debates on this topic could be cooled down a little bit if either side actually had some facts and figures to support their position. Too many times we let our emotions drive our reasoning and we really don’t want the facts to get in the way. What I would like to do with this article is present an unbiased look at some of the numbers associated with trade and then let you, the reader, form your own opinion.
From 2000 to 2003 the U.S. exported about 2.5 billion pounds of beef and veal on a carcass weight basis. All of my numbers will be from USDA agencies. I am sorry if you don’t believe these numbers, but they are the best we have. Anyway, during that time period Japan accounted for about 1 billion pounds of our exports. They were our largest market and we had nearly double the volume of beef going there compared to the next largest market. South Korea was our fastest growing market during that time period with volume to that market increasing from about 350 million pounds a year to nearly 600 million pounds.
Exports to Mexico varied between 516 million and 629 million pounds from 2000-2003 and that was our 2nd largest market. Exports to Canada were fairly stable only varying from 227 million to 254 million pounds. These four markets accounted for about 85 percent of our total beef exports.
Following the discovery of BSE in the U.S. in December of 2003, almost all of our export markets were closed. Of our four major export markets, Mexico was the quickest to reopen their market and export trade to Mexico in 2004 was 333 million pounds, which was almost 80 percent of our total exports that year. During the last four years export volume to Mexico has been about equal with the 2000-2003 volume. That has been our number one volume market since 2004. Canada also was much quicker to normalize trade than either Japan or South Korea. Beef export volume was down in 2004 and 2005 with Canada but by 2006 pre-BSE volumes were again being exported. The last two year’s beef export volume to Canada has averaged about 365 million pounds, an increase of over 100 million pounds compared to the 2000-2003 time period.
Japan and South Korea have been a completely different story. Export volume has been slow to return to each of these countries. Part of the reason has been political, as each country has developed a set of stringent protocols that go beyond what the international science community has agreed are safe approaches to handling beef. Another reason is increased competition from Australian beef and also from U.S. pork. Both significantly increased their market share during the time U.S. beef was shut out of those markets. In 2009, export volume to Japan was about 275 million pounds, a little more than a quarter of the pre-BSE export volume. Exports to South Korea have also been about a quarter of the pre-BSE levels, averaging about 146 million pounds. However, on a positive note, Vietnam has become a major destination for U.S. beef. Last year we shipped nearly 150 million pound of beef there which exceeded volume to South Korea.
In total, the last two years we have exported 1.9 billion pounds of beef and veal. That is about 75 percent of the pre-BSE export volume of 2.5 billion pounds.
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What about the other side of the market? How many pounds of beef and cattle do we import into the U.S.? Imports have been more constant over the last 10 years than have exports. From 2000-2003, total beef and veal imports on a carcass weight basis averaged 3.1 billion pounds. From 2004 to 2007, imports have averaged just over 3.3 billion pounds. However in 2008 and 2009, imports decreased to 2.5 and 2.6 billion pounds.
Australia and Canada are the top two countries from which we import beef. Most of the product from Australia is beef, while we get most of the carcass weight equivalent beef from Canada in the form of feeder cattle and live cattle ready for slaughter. Combined, these two countries account for about two-thirds of the total beef imports.
Those who like to argue against beef trade generally use these export and import volume numbers, if they choose to use any numbers at all. Clearly we do import more total pounds of beef and veal than we export. In most years that amounts to between 500 million and 1 billion pounds of additional beef. But before you jump on the anti-trade bandwagon too quickly, let me share one more set of numbers: the dollar value of our exports and our imports.
From 2000-2003 the total dollar value of U.S. beef exports averaged about $5.25 billion. During that same time period our total beef imports cost about $3.75 billion. That means during the pre-BSE time period, total beef trade was adding about $1.5 billion to the beef industry. Following the loss of export markets in 2004 and 2005, the dollar value of our exports dropped to about $2.75 billion while import values rose to over $4 billion. During those two years, trade cost the beef industry about $1.5 billion per year. Beef export values were back over $5.5 billion in 2008 and with a difficult trade year in 2009 were about $4.5 billion. Import values in the last two years have been about $4.5 and $4 billion each year. Therefore, the U.S. has had a positive, in terms of dollar value, trade balance again in the last two years.
So is trade good or bad? I will let you decide that. There are always winners and losers when trade occurs. However, on balance, I believe that if we are exporting more total value of beef than we are importing, than beef, live cattle and ultimately feeder cattle are probably all higher priced because of trade.