anderson

Dr. David Anderson

There are several different facets of the American Beef industry, from cow/calf production all the way through processing. The system isn’t perfect, and the coronavirus helped shed light on some of the U.S. beef industry’s market imperfections.

In an effort to evaluate some of these issues and approach them with fact-based understanding, North Dakota State University has put together a biweekly webinar series titled: Intersection of Cattle and Beef Industries, where leading ag economists and beef experts are sharing their insight on the matters at hand.

During the first session, streamed May 7, the opening topic discussed was U.S. beef imports and exports. Dr. David Anderson, ag econ professor and Extension specialist for Texas A&M University, broke down how U.S. beef imports and exports really work.

The importing and exporting of beef, in its simplest form, is a balancing act. In order for U.S. beef to be lucrative and sold on the world market, the U.S. must reciprocate the business and be open to imports. The U.S. moves a lot of beef, and at times we have been the biggest importer and exporter simultaneously.

During his talk, Anderson pointed out this is the case because not all beef is the same, meaning not all cuts of beef are consumed and appreciated at the same level. The U.S. has a deep love for hamburger, while Japan has a hankering for higher end cuts and Korea enjoys short ribs. There are some cultures out there that find livers and other organs divine, while most consumers in the U.S., for example, have not developed a palate for those cuts.

“The key is there are people in other parts of the world willing to pay more for certain products than we are,” Anderson stated during the webinar.

Because there are different demands for different cuts of meat, the U.S. exports boxes with specific cuts of meat in them to other countries, not whole or half carcasses. This is not only the more economical way to market beef, but also the most efficient. Boxes are much easier to pack on big shipping containers than hanging sides of meat.

“The big thing is, we sell people what they want to buy and don’t send them a lot of other stuff with it,” he said.

Presented in numbers, the U.S. exports about 11 percent of its total beef production. That is equivalent to roughly 2.8 billion pounds of beef annually, give or take. The main countries we export to are Japan, Korea, Mexico and Canada, with Hong Kong getting a sizable chunk of our beef products, as well.

“In terms of value, we tend to export more than we import,” Anderson said in a follow up phone interview.

In the United States, hamburger is by and large the most popular cut of meat. In fact, ground beef accounts for 45 percent of U.S. beef consumption with the average American eating approximately 26 pounds of hamburger a year.

The United States’ domestic source of ground beef is cull cows. It simply isn’t economical to be grinding up choice or prime fed animals into a low-value product such as hamburger. Cull cows are perfect for the job, but their market is cyclical. On years of drought or when calf prices are low, cull cows are often on the market in abundance, but during years when grass is good and prices are high, producers don’t want to sell the factory.

Given this knowledge, it probably comes as no surprise the U.S. mainly imports trimmings from other countries. Although the media tends to highlight the United States importing beef from countries with substandard processing and shipping regulations, Anderson emphasized those countries really represent a very small percentage of our import market.

“Our biggest import sources are Australia, New Zealand, Canada and Mexico. Australia and New Zealand are a big source of lean trimmings to go into ground beef,” Anderson explained.

A lot of cattle are transferred back and forth between the U.S., Canada and Mexico. We share relatively long boarders with both countries, and really, it comes down to location. For example, it can often be a shorter truck ride for cattle to go from Montana to Alberta to finishing yards and packers than it is for Montana cattle to be trucked to some finishing facilities in the U.S. Likewise, it may be a shorter distance for cattle to be trucked from Toronto to Iowa than from Toronto to Alberta.

Anderson went on to say, is really crucial to understand in what form imported meat arrives to the U.S. Most of the meat coming from countries like Brazil and Namibia are entering the U.S. as finished, packaged products, such as jerky. Keep in mind, scenarios can differ. Cattle from Canada and Mexico may be traded on the hoof, while meat from Australia and New Zealand may come in either fresh or as a pre-packaged product.

Continuing, Anderson discussed it is often misconstrued that countries import beef, when in reality it is companies and countries set the import rules and regulations. Packing facilities turn beef into carcasses and may further whittle them down into primal cuts, but they most commonly do not do the fabrication of meat – a step of the process that is done at a different facility and often done by a different company entirely.

“A lot of those imports happen at that next step. You’ll have companies that make hamburger patties for Burger King or McDonalds, so it is those companies that are importing a lot of those trimmings,” Anderson said.

In summation, beef imports and exports may be a complex and diverse subject to discuss. Nevertheless, it is important to appreciate how a healthy balance of imports and exports is crucial to the U.S. beef market structure. 

Stay tuned for an article next issue where Dr. Anderson talks about how the implications of trade effect the possibility of Mandatory Country of Origin Labeling.