The trade agreements of 2019 should have some benefits for beef markets in 2020, Elliott Dennis writes in his “In the Cattle Markets” column. Dennis is an assistant professor and livestock marketing economist for the University of Nebraska.
“This past year has seen several important trade agreements agreed to which will directly benefit the beef complex,” Dennis says. “The Japanese-U.S. trade deal will effectively lower tariffs for 90% of beef commodities from 38.5% to 9% between 2019 and 2033.”
Beef producers also saw progress with European markets.
“The European Union-U.S. trade deal will increase the quota limit of hormone-free beef for the U.S. to 35,000 tons over the next seven years,” Dennis says.
In addition, the end of the year brought progress on the U.S.-Mexico-Canada Agreement, with the U.S. House of Representatives approving the deal.
Dennis says these trade deals are important because of their impact on demand for U.S. beef.
“So why has there been so much attention on securing export deals that are favorable for livestock products and in particular for beef?” Dennis says. “The short answer is because that is where demand is growing.”
Export demand has shown the most growth in the recently completed decade, making it a key area producers are watching.
“Domestic demand for beef products fluctuates year to year but overall demand is trending sideways,” Dennis says. “Chicken has shown the largest increase in domestic demand since the late 1980s. Export demand tells a different story. Since 2010, export demand for beef has increased 100% and outpaced the other protein products by more than 50%.
“Thus, domestic demand for beef product is relatively flat but export demand for beef is sharply increasing.”
With export demands growing, it also means more requirements about how U.S. beef is raised.
“As export demand for U.S. beef grows this signals to expand production with a yield and quality grade product that each individual country demands,” Dennis says.
“Likewise, certain countries demand/require the livestock, and cattle in particular, be raised, treated and housed in certain ways. For example, the EU requires hormone-free beef. Other countries such as China require similar regulations.”