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Smoke and Mirrors - Examining US Beef Import & Export Market

April 16, 2023

This article was originally published on The Beef Initiative's substack. If this sort of information is interesting or useful to you, consider subscribing to the substack, or the 'I am Texas Slim' podcast!

The total American cattle herd today sits at approximately 94 million head, according to data gathered by the USDA in their latest semi-annual cattle report. The size of the herd could lead to the assumption that if all cattle raised in the United States were finished, processed, and sold regionally, the aggregate product would be able to support domestic consumption. This, however, presupposes the non-existence of global beef import and export markets – and that presupposition is inaccurate.

Data from Statista shows that the United States exported 3.27 billion pounds of beef, and imported 3.265 billion pounds in 2022. Data from recent years tells a similar story: the American beef industry exports about the same quantity of beef as it imports, taking into account year-to-year disruptions.

At first glance, this phenomenon struck me as odd: if the American beef industry is the most efficient producer of top-quality beef, why would we need to import additional livestock, or go through the headache of shipping? What I found, after digging into official (industry) reports and sources, is that those who have access to the capital and logistical resources end up fetching higher prices abroad for both premium and unpopular cuts.

In the following article, we'll:

  • Examine US beef export and import markets
  • Learn about who the largest players are in each market
  • Review the official reasoning as to why American producers should participate in either market
  • Explore solutions to confidently steward your family’s health moving forward

US Beef Export Markets

Certain cuts of beef are more valuable abroad than they would be if sold in the US. Beef tongue, for example, is considered a delicacy throughout South East Asia, and Japan’s demand for tongue is especially noteworthy.

This 2017 Beef Magazine article illustrates the point: the 2017 average price of beef tongue in Japan was $6.82, contrasted against the export value in 2012 (prior to expanded access to the Japanese market) which was $2.73 per pound. That’s nearly 2.5 times the profitability of the 2012 price, and industry insiders estimate that the current difference in price between selling domestically and exporting to Japan is closer to 5-7 times.

It is not only US-produced tongue and offal that gets exported, premium cuts are also exported abroad where hotels and restaurants pay exorbitant prices for those products.

American beef exports to SE Asia have been increasing steadily over the past decade, and this trend has been increased drastically over the last two years. 2021 saw a monumental increase in Chinese (Hong Kong included in USDA data) demand for US beef which amounted to a thirteen-fold increase in exports. The increase is a function of a return to ‘normalized’ demand, and the 2020 signing of the Phase One Agreement which removed some long-standing, outdated trade restrictions.

The USDA's International Agricultural Trade Report indicates similar trends across the region. In the first three quarters of 2022, US beef exports to South East Asia totaled $6.6 billion, representing a 22% increase YoY on a value basis.

A commonality between the largest export markets for US beef (South Korea, Japan, and China) is that each country has a trade agreement in place which incentivizes US beef exports.

In 2021 there was a 30-day period where, due to a Japanese import threshold being breached, the price (plus safeguard tariffs) on American beef exceeded that of competitor nation, Australia. Explicitly, these safeguard measures are defined as “emergency” actions concerning imports of particular products, where such imports have caused or threaten to cause serious injury to the importing country’s domestic industry.

Shortly after this event, in June of 2022, an amended version of the US-Japan Trade Agreement was signed which reconfigured the safeguard mechanism to be much less likely to be breached, and thus, ensures the availability of US beef to Japanese consumers. Along those same lines, the US-South Korea trade agreement is structured in such a way that starting in 2026, US beef products will enter duty-free, further increasing the profitability of exporting American-produced beef.

The sponsored narrative is that beef exports are good for everyone: they allow packers to access foreign markets that would otherwise be untapped. Certain cuts (tongue, offal) are not popular in the United States, command premiums abroad, and we’re told that the increased value of a beef is passed through to ranchers and producers themselves. The last point is dubious at best.

There are not any comprehensive (official) data sources that show a “pass-through” transfer of value from international packers back to the producers. If nowhere else, this value-add would be visible in the prices of wholesale beef before and after these export markets had been established.

Statista’s average value of retail and wholesale beef shows a modest increase in wholesale values in the 2011-2015 range, but there’s not enough evidence to conclude that price appreciation resulted from export markets. Chances are that price increase is more a factor of reduced supply or a decrease in USD purchasing power.

Exporting American beef is certainly good for foreign consumers, they gain access to some of the highest quality products on the planet, and it is great for those international packing/processing conglomerates with access to nearly infinite capital and who can lobby legislators at will -- but it is not apparent that the American rancher profits from this arrangement at all.

US Beef Import Markets

Since multinational packing/processing companies have access to foreign markets, and since they do export an immense amount of beef abroad, imports would seem to be necessary in order to satisfy domestic consumption. Accounting for seasonal variability and issues specific to a given period, the US imports roughly as much (or more) beef than it exports on a carcass-weight basis each year. This phenomenon is a result of several factors, but I believe it is useful here to focus on the ‘hamburger dilemma.’

Generally speaking, American beef demand is concentrated on high-value cuts like steaks, and ground beef. Ground beef can be made with nearly any part of the cow, but is most commonly associated with trimmings, back fat, tongue & offal, as well as lesser-wanted cuts (i.e. round and chuck roasts).

But why would those meat-packing conglomerates choose to grind cuts like tongue, offal, and even steaks in certain cases? Each of those cuts will fetch premiums in the export market, and so they will be sold abroad.

Where does that leave American ground beef consumers?

A Kentucky Cattlemen’s Association FAQ sheet notes that “We [US beef producers] produce high-quality grain-finished beef, and as a result, we produce a lot of fatty trimmings.” You might wonder, “why are American finished cattle so fat?” It is likely a result of the relationship between beef feedlots and the domestic GMO corn and soy industry.

Following the butchering process, there is a significant amount of fat left over. Since cuts that would be blended with the fat are de-facto spoken for by export markets, packing companies import lean trim to then produce ground beef. The US imports a large portion of lean trim from Canada and Mexico – live calves are also imported from our neighbors to the North and South. In recent years, a large portion of lean trim has been imported from New Zealand, Australia, and Brazil.

Unfortunately, Americans’ sense of what ground beef should cost has been warped by the global beef import/export industry. Now think about how fast food restaurants are able to offer beef products at such low prices: economies are not vacuums, someone is always footing the bill.

In the case of ground beef sold in the US, there are (at least) two forms of price subsidization: first, from the availability of cheap grains (themselves a product of government subsidization) meant to quickly fatten cattle in feedlots. Second, is the availability of cheap “lean trim” available in import markets: while all imports must maintain a certain level of quality control (per USDA), it is hard to imagine that each touchpoint that trim or calf passed through is as focused on quality as one might prefer.

The ‘ground beef dilemma’ is a useful lens through which to understand why at The Beef Initiative, we do not engage in price comparisons between our producers' ground beef and those products at the grocery store. Ours is a premium product, crafted intentionally with a consumer’s best interests in mind, whereas the other is a by-product of profit-chasing on an international commodity market – there is simply no comparison.

Conclusion and Solutions

At the end of the day, markets are driven by the economic incentives of their participants. Since multinational packing/processing conglomerates can source seemingly bottomless amounts of capital, and have the ear(s) of powerful legislators, they are incentivized to skew export/import markets to benefit their bottom lines. Foreign consumers (SE Asia in particular) have demonstrated their willingness to bid up the prices of premium and lesser-wanted cuts, effectively pricing out domestic consumption of that same product.

It could be argued that American consumers benefit from the availability of affordable ground beef – though this argument is high time preference, as it does not account for the health implications of consuming inferior products. On a long enough timescale, it is hard to argue that cheap food today balances the negative impacts of such a consumption model.

The saying goes something like this, “you either pay your rancher today, or you pay your doctor down the road.” This very much encapsulates the solution that we at The Beef Initiative recommend: get to know producers near you. Shake their hands, ask to be educated about why they operate in the way that they do, and patronize their businesses – taking all of these steps will ensure that you, your friends, and your family have consistent access to quality beef.

There is no comparison between a pound of ground beef at a big-box grocery store, and a pound of ground from a producer that you know directly. Energetically, by sourcing from local producers, you are opting to consume the hyper-local nutrients and minerals from the soil upon which you stand. Morally, by supporting intentional livestock production, you are contributing to the un-bastardization of the cow. For centuries, and across nearly every culture, humans have revered and cherished our relationships with ruminant animals -- the cow in particular. Beyond their capacity to manage the land directly, ruminants are specially designed to transform matter we cannot consume (grass, forage) into that which we can (dairy, meat).

We owe it to our ancestors to right the wrongs that have been and continue to be perpetrated against the sacred cow – the first step in the solution is for consumers to shift their demand away from those who seek only to profit. Practically, this can mean making relationships at farmers' markets, with local producers you may already know of, or by sourcing beef directly through the Beef Initiative where we have taken extensive care to validate the quality of products.

Solutions are all around us, and all it takes is a handshake, kindness, and the willingness to learn from, and support the source of the seed of the beef industry: The Great American Rancher.

Thank you for reading! If you would like to contribute to the sovereignty of the Great American Rancher, please consider donating to the I Am Texas Slim Foundation, where grants are awarded every year to ranchers seeking to expand their operations.

This article goes over some of what Jason Wrich is planning to do with the innagural grant.