Does the Import/Export Market Help the US Beef Producer?
I am often asked, “What is the value to me (the beef cattle producer) of imported beef to the U.S.?” The long and the short of the answer is, “a great deal!” Beef trade is a complex system. The fact is, imported beef goes hand-in-hand with exported beef. Imported and exported beef add value to the U.S. beef industry.
Striking a balance
Oklahoma State University livestock economist, Derrell Peel, says, “Exports and imports help sort out the complex set of beef products in domestic and international markets to maximize the value to U.S. beef producers.” The quantity of beef that the US imports (lbs) is usually greater than what it exports. But the value ($) of beef exported greatly exceeds the value of imported beef. UF/IFAS Beef Economist, Chris Prevatt, expects lbs of beef exported to exceed imports in 2020.
U.S. beef producers receive about $300/head in additional premiums as a result of export values in fed cattle. According to Prevatt, the cow-calf producer receives approximately $24/cwt in added value to feeder calves as a result of U.S. beef exports.
The U.S. exports a great deal of high value (i.e. steak, tenderloin, etc) and low value (i.e. tongue, liver, kidneys, hide, etc) to foreign markets. These markets are willing to pay much higher premiums for these products than the U.S. consumer. Either because U.S. consumers don’t eat those products (when was the last time you ate beef tongue?), and/or because foreign markets are willing to pay a much higher value for premium cuts than the U.S. consumer. Japan is a major importer of U.S. premium beef cuts and their consumers are willing to pay top dollar, or yen, for that beef.
In order to meet the enormous US consumer demand for ground beef, a majority of beef imports are lean trimmings. These trimmings are mixed with fatty trimmings from U.S. fed cattle to make ground beef. Peel states, “without additional lean, some of those fed trimmings would have, at best, value as tallow rather than as ground beef.”
The importance of imported trimmings
Peel suggests that, without imported beef trimmings, one of several outcomes would impact the beef industry:
- Less ground beef would be produced, reducing the value of the nearly 150 pounds of fed trim from each carcass;
- Approximately 10 to 15 percent of steers and heifers would need to be raised and slaughtered as non-fed beef for lean – similar to Australian range beef – and would be valued roughly the same as cow carcasses; or
- Additional lean from fed carcasses could be ground for hamburger rather than being used for whatever higher value it currently might possess.
Beef imports are an essential compliment to U.S. beef production by improving product utilization in the U.S. and increasing the total value of production across all sectors of the beef industry.